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Dynamic Effects of the Order of Entry on Market Share, Trial Penetration, and Repeat Purchases for Frequently Purchased Consumer Goods

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  • Gurumurthy Kalyanaram

    (The University of Texas at Dallas)

  • Glen L. Urban

    (Sloan School of Management, Massachusetts Institute of Technology)

Abstract

A time series cross-sectional analysis of 18 successful later entrants in 8 categories of consumer packaged goods over the period from October 1983 to January 1988 confirms previous empirical findings that, after correcting for differences in marketing effort, later entrants suffer a long-term market share disadvantage. New evidence of the penalties associated with later entry are found in statistical estimation of models of cumulative trial, first repeat, and subsequent repeat purchasing. Significantly lower asymptotic levels are found in both trial and repeat behavior. However based on this data, the rate of approach of later entrants to their lower asymptotic performance measures is either equal to or faster than early entrants and provides evidence of a compensating partial effect accrued by later entrants.

Suggested Citation

  • Gurumurthy Kalyanaram & Glen L. Urban, 1992. "Dynamic Effects of the Order of Entry on Market Share, Trial Penetration, and Repeat Purchases for Frequently Purchased Consumer Goods," Marketing Science, INFORMS, vol. 11(3), pages 235-250.
  • Handle: RePEc:inm:ormksc:v:11:y:1992:i:3:p:235-250
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    File URL: http://dx.doi.org/10.1287/mksc.11.3.235
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    References listed on IDEAS

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    Cited by:

    1. Ernst R. Berndt & Linda T. Bui & David H. Lucking-Reiley & Glen L. Urban, 1996. "The Roles of Marketing, Product Quality, and Price Competition in the Growth and Composition of the U.S. Antiulcer Drug Industry," NBER Chapters,in: The Economics of New Goods, pages 277-328 National Bureau of Economic Research, Inc.
    2. Suzuki, Yoshinori & Tyworth, John E. & Novack, Robert A., 2001. "Airline market share and customer service quality: a reference-dependent model," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(9), pages 773-788, November.
    3. Govert E. Bijwaard & Maarten C.W. Janssen & Emiel Maasland, 2005. "Early Mover Advantages," Tinbergen Institute Discussion Papers 05-007/1, Tinbergen Institute.
    4. John Hauser & Gerard J. Tellis & Abbie Griffin, 2006. "Research on Innovation: A Review and Agenda for," Marketing Science, INFORMS, vol. 25(6), pages 687-717, 11-12.
    5. Ruiz-Conde, Enar & Wieringa, Jaap E. & Leeflang, Peter S.H., 2014. "Competitive diffusion of new prescription drugs: The role of pharmaceutical marketing investment," Technological Forecasting and Social Change, Elsevier, vol. 88(C), pages 49-63.
    6. Riemer, Hila & Mallik, Suman & Sudharshan, Devanathan, 2002. "Market Shares Follow the Zipf Distribution," Working Papers 02-0125, University of Illinois at Urbana-Champaign, College of Business.
    7. Clement, Michel & Litfin, Thorsten & Vanini, Sven, 1997. "Ist die Pionierrolle ein Erfolgsfaktor? Eine kritische Analyse der empirischen Forschungsergebnisse," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 446, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    8. de Ruyter, Ko & Wetzels, Martin, 2000. "The role of corporate image and extension similarity in service brand extensions," Journal of Economic Psychology, Elsevier, vol. 21(6), pages 639-659, December.
    9. J. Miguel Villas-Boas, 2004. "Consumer Learning, Brand Loyalty, and Competition," Marketing Science, INFORMS, vol. 23(1), pages 134-145, December.
    10. Urban, Glen L., 1996. "New product modeling : a 30 year retrospective and future challenges," Working papers 3908-96., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    11. Marcel Corstjens & Edouard Demeire & Ira Horowitz, 2005. "New-product success in the pharmaceutical industry: how many bites at the cherry?," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(4), pages 319-331.
    12. Lopez, Luis E. & Roberts, Edward B., 2002. "First-mover advantages in regimes of weak appropriability: the case of financial services innovations," Journal of Business Research, Elsevier, vol. 55(12), pages 997-1005, December.
    13. Usero, Belén & Fernández, Zulima, 2009. "First come, first served: How market and non-market actions influence pioneer market share," Journal of Business Research, Elsevier, vol. 62(11), pages 1139-1145, November.
    14. MATHUR Sameer & DEWANI Prem Prakash, 2015. "Market Entry, Product Quality And Price Competition," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 10(2), pages 62-82, August.
    15. Muck, Johannes & Heimeshoff, Ulrich, 2012. "First mover advantages in mobile telecommunications: Evidence from OECD countries," DICE Discussion Papers 71, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    16. Dean C. H. Wilkie & Lester W. Johnson, 2016. "Is there a negative relationship between the order-of-brand entry and market share?," Marketing Letters, Springer, vol. 27(2), pages 211-222, June.
    17. Min, Sungwook & Wolfinbarger, Mary, 2005. "Market share, profit margin, and marketing efficiency of early movers, bricks and clicks, and specialists in e-commerce," Journal of Business Research, Elsevier, vol. 58(8), pages 1030-1039, August.
    18. Ramasesh, Ranga & Tirupati, Devanath & Vaitsos, Constantin A., 2010. "Modeling process-switching decisions under product life cycle uncertainty," International Journal of Production Economics, Elsevier, vol. 126(2), pages 236-246, August.
    19. Durand, Rodolphe & Coeurderoy, Regis, 2001. "Age, order of entry, strategic orientation, and organizational performance," Journal of Business Venturing, Elsevier, vol. 16(5), pages 471-494, September.
    20. Bauer, Hans H. & Fischer, Marc, 2000. "Product life cycle patterns for pharmaceuticals and their impact on R&D profitability of late mover products," International Business Review, Elsevier, vol. 9(6), pages 703-725, December.
    21. Ansgar Dorenkamp & Ivo Mossig, 2010. "Economic Policy and its Impact on the Evolution of Clusters and Spatial Systems Exemplified by German TV Programme Production," Chapters,in: Emerging Clusters, chapter 3 Edward Elgar Publishing.
    22. Shepherd, Dean A. & Douglas, Evan J. & Shanley, Mark, 2000. "New venture survival: Ignorance, external shocks, and risk reduction strategies," Journal of Business Venturing, Elsevier, vol. 15(5-6), pages 393-410.
    23. Bart J. Bronnenberg & Carl F. Mela, 2004. "Market Roll-Out and Retailer Adoption for New Brands," Marketing Science, INFORMS, vol. 23(4), pages 500-518, September.

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    Keywords

    new products; order of entry; share; trial; repeat; pioneering;

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