Getting a grip on the saddle: Chasms or cycles?

The "saddle" is a sudden, sustained, and deep drop in sales of a new product, after a period of rapid growth following takeoff, followed by a gradual recovery to the former peak. The authors test for the generalizability of the saddle across products and countries and for three rival explanations: chasms in adopter segments, business cycles, and technological cycles. They model both boundary points of the saddle-start of the sales drop and recovery to the initial peak-using split-population models. Empirical analysis of historical sales data from ten products across 19 countries shows that the saddle is fairly pervasive. The onset of the saddle occurs in 148 product-country combinations. On average, the saddle occurs nine years after takeoff, at a mean penetration of 30%, and it lasts for eight years with a 29% drop in sales at its depth. The results support explanations of chasms and technological cycles for information/entertainment products and business cycles and technological cycles for kitchen/laundry products. The authors conclude with a discussion of the findings, contributions, and implications.

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