Back in the early 1980’s Adam Osborne, who created the Osborne computer, made the mistake of giving a sneak preview of a newer, lighter model called the Osborne Executive. This decision cost Osborne his business, because buyers wanted the less-weighty computer (25 pounds!) so they quit buying his existing computers and waited for the new one to become available. The story goes that the company essentially died on the vine, for the cash flow from new sales dried up while customers waited for the newer model.
Osborne’s big mistake was to introduce a new piece of technology before it was available for purchase. Tech buyers will immediately cease to buy an older model and wait for the newer one once the word gets out…if you don’t have it ready to sell, your sales plummet. This became such a famous case study that it is still known today as the Osborne Effect.
It is always wise to forego advertising a new model until the model actually exists for purchase? It depends on your industry. The movie industry always advertises new movies before they are released, looking to drive up the buzz and make big hits at the box office on opening day. But that’s a different biz model, because they’ve typically already squeezed sales out of the previous releases long before the new movie is out. (Think Harry Potter or James Bond.)
Generally, though, if you sell a product (jewelry, luggage, clothing, air conditioners, etc.) you don’t want to get stuck with a lot of existing inventory because you have started to market a “new, improved” version of the same thing. And you don’t want your sales of existing inventory to tank when word gets out that in a few months the “new, improved” version will be available. A few months can be a long time to wait for cash flow!
Think about your own products and be aware of the Osborne Effect. Plan wisely for releases of newer “models” of what you sell, and don’t create a thirsty crowd if you don’t have something to sell them. Osborne eventually declared bankruptcy. You and I can learn from his mistake.