Critical decisions in new product launch: pricing and advertising strategies on consumer adoption of green product innovation

Before launching a new product, product managers must determine an appropriate marketing strategy. Pricing and advertising strategies are major tools that firms employ to persuade consumers to accept product innovation. Scholars have discussed the significance of pricing and advertising strategies for consumer decision behaviour. According to range theory, people use the range of recalled price experiences to set a lower and upper bound of price expectations, and the attractiveness of a market price is a function of its relative location within this range. Previous research indicates that the pioneer brand's initial price defines consumers' initial reference price, regardless of whether the pioneer brand employs a skimming or penetration strategy. Therefore, this study examined the effects that pricing strategies (i.e. market-skimming pricing vs. market-penetration pricing) and advertising strategies (functional advertisement vs. emotional advertisement) have on consumer-perceived quality, perceived risk, perceived value, and adoption in the context of green product innovation. We proposed a conceptual model comprising 8 hypotheses and adopted a 2 × 2 experimental research design, using a structured questionnaire to collect field data for testing the proposed hypotheses. The results showed that a market-penetration pricing strategy reduces consumer financial risk and increases consumer-perceived value, ultimately increases consumer purchase intention of product innovation. A functional advertisement seems to be more efficient than an emotional advertisement in influencing consumer adoption of product innovation. The results provide theoretical insights into product innovation and management implications for new product providers.