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Order of Entry as a Moderator of the Effect of the Marketing Mix on Market Share


  • Douglas Bowman

    (Purdue University)

  • Hubert Gatignon



Order of entry has been demonstrated to have a significant effect on market share. A number of explanations for this effect have been suggested in the marketing and strategy literatures. To date, the market share advantage gained by pioneers has typically been treated as a main effect—an automatic regularity. Treating order-of-entry as a main effect implies that there is no penalty on the effectiveness of a brand's marketing instruments for late entry and that a late entrant can compensate for being late by dedicating sufficient marketing resources to their product. In this study, we investigate the influence of order-of-entry into a market on the effectiveness of a firm's marketing mix decisions by asking the question, “Can followers compensate for not being first by their marketing mix decisions?” Also, even if they can compensate for being late, does this effort become increasingly more difficult with later entry? That is, are there asymmetries in the effectiveness of a brand's marketing mix variables that relate to its order of entry into the market, or as has been typically assumed to date, is order of entry strictly a main effect? An asymmetry exists, for example, if the market response to advertising is different for the first entrant versus the second or third entrant. An asymmetry also exists if the effects of, say, a price change by the first entrant on the second entrant are different than the effects on the third entrant. We develop a market share attraction model where the parameters vary as a function of order-of-entry. Our main contribution is in modeling the sources of order-of-entry advantage as asymmetries in the effectiveness of a brand's marketing instruments. Hence, distinct from previous research we explain why there are inherent order-of-entry effects. This paper is potentially of interest to researchers developing market share models and studying the effectiveness of marketing-mix variables. The substantive implication of our results concern directly academics interested in marketing strategy as well as the practicing marketing strategists. We model asymmetries in the market response of early entrants versus late entrants using data from two durables and three nondurables categories. With one exception, all data sets are established from the inception of the category and hence do not suffer from the possible bias of excluding pioneers who have failed. Results show that asymmetries in the effectiveness of a brand's marketing mix variables are an essential source of order-of-entry effects; we find that the main effects of order of entry are minimal. Order-of-entry effects do not necessarily lead to lower shares, but overcoming these effects is not without substantial cost to the late entrant. Our results support previous research that has demonstrated advantages to early entry. In addition, we provide guidelines for how late entrants should compete. Later entry tends to reduce a competitor's price sensitivity, suggesting that they not instigate in a price war with earlier entrants in order to gain share. Order-of-entry tends to decrease response to quality and to promotion. To achieve the same impact on market share, later entrants need a bigger change in quality and need to spend more on promotion. Our data did not support an asymmetric effect on advertising.

Suggested Citation

  • Douglas Bowman & Hubert Gatignon, 1996. "Order of Entry as a Moderator of the Effect of the Marketing Mix on Market Share," Marketing Science, INFORMS, vol. 15(3), pages 222-242.
  • Handle: RePEc:inm:ormksc:v:15:y:1996:i:3:p:222-242

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    References listed on IDEAS

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    2. Gombau, Verònica & Segarra Blasco, Agustí, 2011. "The Innovation and Imitation Dichotomy in Spanish firms: do absorptive capacity and the technological frontier matter?," Working Papers 2072/179666, Universitat Rovira i Virgili, Department of Economics.
    3. Agarwal, Rajshree & Echambadi, Raj & Franco, April M. & Sarkar, M. B., 2002. "Knowledge Transfer through Congenital Learning: Spin-Out Generation, Growth and Survival," Working Papers 02-0101, University of Illinois at Urbana-Champaign, College of Business.
    4. Jiatao Li & Rajiv Kozhikode, 2008. "Knowledge management and innovation strategy: The challenge for latecomers in emerging economies," Asia Pacific Journal of Management, Springer, vol. 25(3), pages 429-450, September.
    5. William P. Putsis, 1999. "Empirical analysis of competitive interaction in food product categories," Agribusiness, John Wiley & Sons, Ltd., vol. 15(3), pages 295-311.
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    7. 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.
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    10. William Boulding & Markus Christen, 2008. "Disentangling Pioneering Cost Advantages and Disadvantages," Marketing Science, INFORMS, vol. 27(4), pages 699-716, 07-08.
    11. 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.
    12. Himme, Alexander, 2005. "Der Einfluss der Markteintrittsreihenfolge auf den Unternehmenserfolg: Eine Zusammenfassung empirischer Arbeiten und Leitlinien für die weitere Forschung auf diesem Gebiet," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 600, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    13. 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.
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    15. Koulamas, Christos & Kyparisis, George J, 2010. "A note on the effects of downstream efficiency on upstream pricing," European Journal of Operational Research, Elsevier, vol. 200(3), pages 926-928, February.
    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. Jonathan D. Bohlmann & Peter N. Golder & Debanjan Mitra, 2002. "Deconstructing the Pioneer's Advantage: Examining Vintage Effects and Consumer Valuations of Quality and Variety," Management Science, INFORMS, vol. 48(9), pages 1175-1195, September.
    18. 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.
    19. 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.
    20. Mohan V. Tatikonda & Mitzi M. Montoya-Weiss, 2001. "Integrating Operations and Marketing Perspectives of Product Innovation: The Influence of Organizational Process Factors and Capabilities on Development Performance," Management Science, INFORMS, vol. 47(1), pages 151-172, January.
    21. Bart Bronnenberg, 2008. "Brand competition in CPG industries: Sustaining large local advantages with little product differentiation," Quantitative Marketing and Economics (QME), Springer, vol. 6(1), pages 79-107, March.
    22. Demetrios Vakratsas & Fred M. Feinberg & Frank M. Bass & Gurumurthy Kalyanaram, 2004. "The Shape of Advertising Response Functions Revisited: A Model of Dynamic Probabilistic Thresholds," Marketing Science, INFORMS, vol. 23(1), pages 109-119, April.
    23. Nobuhiko Terui & Masataka Ban, 2008. "Modeling heterogeneous effective advertising stock using single-source data," Quantitative Marketing and Economics (QME), Springer, vol. 6(4), pages 415-438, December.
    24. Vakratsas, Demetrios, 2008. "The effects of advertising, prices and distribution on market share volatility," European Journal of Operational Research, Elsevier, vol. 187(1), pages 283-293, May.

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