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What is the Preannouncement Effect?

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The preannouncement effect is the tendency for a product announcement or rumor that damages sales. This is associated with strategic mistakes in announcing a product before it's ready for market resulting in customers suspending purchase decisions. This is a particular issue in industries that rapidly improve such as technology. In some cases, firms have been driven into bankruptcy by a combination of a product announcement that depresses sales of an existing product line and delays in releasing the announced product to market.
Overview: Preannouncement Effect
Type
Definition
A product announcement that damages sales of existing products more than it increases sales of the new product.
Also Known As
Osborne effect
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