Ra. Kerin et al., PRODUCT HIERARCHY AND BRAND STRATEGY INFLUENCES ON THE ORDER OF ENTRYEFFECT FOR CONSUMER PACKAGED GOODS, The Journal of product innovation management, 13(1), 1996, pp. 21-34
Manufacturers focus on becoming more agile, software firms deploy rapi
d application development tools-everyone is in a hurry. Although we al
l understand the benefits of being first to market, we understand just
as clearly that not all first-to-market products enjoy the same, sust
ainable benefits from being market pioneers. Why do some pioneering pr
oducts experience a more significant order-of-entry effect than others
? Roger A. Kerin, Gurumurthy Kalyanaram, and Daniel J. Howard examine
two factors-product hierarchy and brand strategy-which may influence t
he magnitude of this effect for new consumer packaged goods. First, th
ey hypothesize that pioneering a new product class offers a greater ad
vantage than introducing a new form to an existing product class. Seco
nd, they predict that the order-of-entry effect will be greater for br
and extensions than for entirely new brands. Finally, considering both
product hierarchy and brand strategy, they expect that the order-of-e
ntry advantage for brand extensions over new brands will be significan
tly greater within new product classes than for new forms of existing
products. These hypotheses are tested using data from the Information
Resources, Inc. Behaviorscan(R) data set. Collected from 2,500 househo
ld panel members, 75 supermarkets, and 25 drugstores, this database co
ntains weekly measures of brand trial penetration as well as brand dis
tribution, price, and promotion information in eight geographic market
s from the period 1983-1988. The models developed in this study explor
e the relationships among brand trial penetration, product hierarchy,
brand strategy, order of entry, lag time between successive brand entr
ants, and marketing mix variables (i.e., price, promotion, distributio
n, and advertising). The study strongly supports all three hypotheses.
In particular the analysis clearly demonstrates that the order-of-ent
ry effect is greatest for a new product class pioneered by a brand ext
ension. Order of entry has the least effect on a new product form pion
eered by an entirely new brand. For a company seeking a competitive ad
vantage from being first to market, innovation ill product function of
fers greater potential benefit than innovation in product form. Such a
company can also benefit from building on the name and reputation of
its established brands. Although the study finds these order-of-entry
effects significant, the effects of marketing mix variables such as pr
oduct price and promotion are consistently stronger.