The Osborne Effect: Why the Timing of Your New Product Announcement is Essential to the Success of Your Business
The Osborne Effect is the impact of a business announcing the release of a new product prematurely, which subsequently causes customers to withhold from buying the business’s currently available products.
The term is derived from the downfall of the Osborne Computer Corporation. The company’s founder, Adam Osborne, announced its new model of computer in 1983, over a year before it was ready to be released. The new model was marketed as higher spec, lower priced, and all-around more superior to the model currently on sale. As a result, the company’s customers refrained from buying the old model or canceled their orders, choosing to wait for the new superior model instead. The company faced a sudden downturn in sales, which contributed to its filing for bankruptcy just two years later.
Adam Osborne’s issue was a timing one. The intentions of his premature announcement were smart: announcing a new product can excite loyal customers, drum up new interest, and get people talking about your business. However, when deciding the right time to announce your new product, it is essential not to undermine the product lines currently on sale.
Of course, there is no magic equation to work out the best time a business should announce its new product. However, there are simple things businesses can do to avoid the Osborne effect:
1. Be secretive.
Don’t explicitly announce a new product, or put a timeline on release. Small hints can drum up interest in a business’s products, but customers won’t have enough information to cancel or delay their purchase of the business’s available product.
The best way to ignite interest in your new product is to initiate “rolling announcements.” Your initial announcement should be vague but intriguing. Over the following months release small hints and updates on development. You should only make the official announcement when your launch date is set and imminent.
2. Ensure your announcement promotes your new product as DIFFERENT rather than BETTER than what is currently available.
Osborne’s problem was it purposely disparaged the current product on sale as inferior to the new one, causing people to cancel and delay their purchases. Focus on your new product’s unique selling points and how they make it great in its own right. And even if your new product IS better than the old product, it should not be marketed as much unless the old product is ready to be discontinued.
3. Ensure new versions of your product never reduce in price.
Another problem with Osborne’s announcement was that the new computer would be superior AND lower in price. Of course, customers didn’t want to pay more for the inferior product already on sale.
Consumers are generally willing to pay more for better-quality products. So don’t worry about trying to lure them in with a price drop.
Conclusion
Ultimately, getting the timing of your new product announcement absolutely perfect is near impossible. So don’t let the fear of the Osborne effect prevent you from innovating and developing new products.
Just remember the key to planning the release of your new product is to create a solid timeline for the release to keep you on track, a secretive but enticing marketing strategy (using regular rolling announcements), and the motivation to deliver your customers high-quality products.
