Getting a Grip on the Saddle: Chasms or Cycles?

Abstract

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.