Is there a negative relationship between the order-of-brand entry and market share?
- PDF / 308,560 Bytes
- 12 Pages / 439.37 x 666.142 pts Page_size
- 94 Downloads / 252 Views
Is there a negative relationship between the order-of-brand entry and market share? Dean C. H. Wilkie & Lester W. Johnson
# Springer Science+Business Media New York 2014
Abstract The order-of-entry effect has been continually examined over the last quarter century, leading to the generalization that a negative relationship exists between the order-of-brand entry and market share. As the number of followers that become market share leaders and the conceptual arguments against this assumption grow, the nonexistence of this negative relationship has yet to be empirically demonstrated. This research challenges the generalization by examining market conditions in which a brand’s entry position has exerted a positive effect on its market share potential, compared with an earlier entry position. Using order-of-entry models consistent with extant literature, an empirical analysis of consumer scanner data across 375 followers reveals two situations that challenge the prediction of a negative relationship between the order-of-brand entry and market share. Keywords Order-of-entry effect . Marketing generalization . Follower . Market share leader
1 Introduction Researchers have recently revisited the influence of entry positions on organizational performance in order to assess the progress in two specific research streams related to (1) pioneering advantages and (2) entry timing decisions (Fosfuri et al. 2013; Lévesque et al. 2013; Lieberman and Montgomery 2013; Vidal and Mitchell 2013). These researchers highlight the continued issues that cast doubts over these research streams such as the reliance on correctly identifying the pioneer (or first mover) and the growing number of marketplace examples that contradict many of the findings. A third
D. C. H. Wilkie (*) School of Marketing, University of New South Wales, Sydney, NSW 2052, Australia e-mail: [email protected] L. W. Johnson Faculty of Business & Law, Swinburne University of Technology, Hawthorn, VIC 3122, Australia
Mark Lett
specific research stream of the order-of-entry effect suffers similar concerns but was omitted from this current assessment. The order-of-entry effect refers specifically to the negative relationship between a brand’s entry position and its continued market share performance. In one of the first studies to use the term, Urban et al. (1986) distinguish the order-of-entry effect from pioneer advantages and entry timing factors, noting that each brand’s entry position can explain its continued performance. Relative to the pioneer, each follower (i.e., any brand in a category other than the pioneer) incurs a negative market share penalty; with each subsequent entry position, the size of this market share penalty increases. Urban et al. (1986, p. 656) also provide estimates of the size of such a market share penalty, given the follower’s entry position, and suggest ways to overcome it through the marketing mix, such that “if the second brand in the market wanted to earn the same market share as the first, it would have to spend 3.4 times more
Data Loading...
