Virtual Reality in New Product Development: Insights from Prelaunch Sales Forecasting for Durables

Abstract

This investigation examines how consumer durable goods producers can leverage virtual reality for new product development. First, the authors develop a prelaunch sales forecasting approach with two key features: virtual reality and an extended macro-flow model. To assess its effectiveness, the authors collect data from 631 potential buyers of two real-world innovations. The results reveal that the new approach yields highly accurate prelaunch forecasts across the two field studies: compared with the actual sales data tracked after the product launches, the prediction errors for the aggregated first-year sales are only 1.9% (Study 1a, original prelaunch sales forecast), .0% (Study 1b, forecast with actual advertisement spending), and 20.0% (Study 1b, original prelaunch forecast). Moreover,