Most new products fail. However, this study shows that durable producers could reduce this economic risk by leveraging virtual reality. With this investigation, our research team provides one of the first articles on virtual reality in business research. In particular, we develop a new virtual reality forecasting approach that makes highly accurate monthly sales forecasts prior to the launch of a new durable. This approach includes a simulated purchase journey in virtual reality encompassing various touchpoints and information sources. Therefore, it also allows assessing realistic consumer behavior even before the product or prototype physically exists. We tested the new forecasting approach in two field studies with two real-world innovations that our collaborating companies actually introduced.

1. Virtual Reality in New
Product Development
Insights from Pre-Launch Sales Forecasting for Durables
From: Harz, Hohenberg, and Homburg (2021)

2. The (sad) reality in new product development (NPD) today
From: Harz, Hohenberg, and Homburg (2021)
46%
Waste of
resources
Furthermore, 46% of all
resources allocated to
new products is spent
on failed products
72%
Missed profit
targets
Approximately 72% of
new products miss
their profit targets
1 out of 3000
Studies found that it
requires about 3000
ideas to produce 1
successful new
product
New product
success
40-90%
New product
failure rates
Evidence indicates that
flop rates of new
products range from
40% to 90% with
innovative products
more likely to fail

3. Can virtual reality (VR) help to improve durable producers’ NPD?
From: Harz, Hohenberg, and Homburg (2021)
IDEA LAUNCH
Scoping
Business
Case
Develop-
ment
Testing and
Forecasting
Accurate feedback
on user behavior
available
Accurate feedback on
user behavior needed

4. To examine this, we developed a new VR forecasting approach
that can be applied in early NPD stages
From: Harz, Hohenberg, and Homburg (2021)
Behavioral data from VR simulation, e.g.
• Information search behavior incl. visits, time and actions,
e.g.
-Local retailer
-Online shop
-Online magazine
• Buying behavior
VR: Consumer’s information
search
VR: Purchase / no-purchase
decision
Information from VR
interventions in information
search and purchase decisions
can be used to improve sales
forecasts for new and developing
products.

5. We tested the new VR forecasting approach in two field studies
with real-world innovations and one lab study
From: Harz, Hohenberg, and Homburg (2021)
GFK COLLABORATION
1
Model development
Virtual reality
programming
Cooperation partner
search for piloting
the new virtual reality
sales forecasting
approach
KITCHEN APPL. FIELD STUDY
2
Focus: Pre-launch
sales forecasting
Product category:
kitchen appliance
Validation: 12
months of actual
real-world sales data
GARDEN TOOL FIELD STUDY
3
Focus: Pre-launch
sales forecasting
Product category:
gardening tool
Validation: 12
months of actual
real-world sales data
LAB STUDY
4
Focus: Exploring
explanations for VR
effectiveness
Product category:
gardening tool

6. Field studies reveal VR enabled pre-launch forecast, much better
than the strongest benchmark model
From: Harz, Hohenberg, and Homburg (2021)
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
1 2 3 4 5 6 7 8 9 10 11 12
Sales
Months from Introduction
KITCHEN APPLIANCE FIELD STUDY
Actual Sales
Extended Macro-Flow Model, Original Pre-launch Forecast
Benchmark Macro-Flow Model, Original Pre-launch Forecast
0
500
1000
1500
2000
2500
3000
3500
1 2 3 4 5 6 7 8 9 10 11 12
Sales
Months from Introduction
GARDEN TOOL FIELD STUDY
Actual Sales
Extended Macro-Flow Model, Original Pre-launch Forecast
Extended Macro-Flow Model, Forecast with Actual Advertisement Spending for Months 9-12
Benchmark Macro-Flow Model, Original Pre-launch Forecast
Benchmark Macro-Flow Model, Forecast with Actual Advertisement Spending for Months 9-12

7. Lab study findings show that VR creates advantages due to higher
perceived presence and vividness
From: Harz, Hohenberg, and Homburg (2021)
VIRTUAL REALITY MECHANISMS
INCREASED DECISION
UNCERTAINTY
The feeling as if
being actually in the
simulation
INCREASED
CONVENIENCE
INCREASED
VIVIDNESS
INCREASED
PRESENCE
The feeling that the
simulation is
detailed and easy to
imagine
The feeling that the
simulation as easy
to use and useful
The feeling that the
purchase decision
is difficult to make