Mahka Moeen

Abstract

Faced with demand uncertainty in a nascent industry, entrants need to strategically consider which customer segments to serve, and what specialized product features can address customers’ preferences. While high product usage breadth implies addressing preferences of a wide range of customers, low product usage breadth indicates inclusion of market-specific features that are specialized to particular customers. We suggest that when entrants have experience in contexts that are potential users of a new product, their products are likely to exhibit low usage breadth. The relationship is moderated by whether they are startups or diversifying entrants, and the cumulative number of customers that adopted the industry’s product before the time of each entrant’s product introduction. The empirical context is the U.S. commercial drone industry.