PRODUCT HIERARCHY AND BRAND STRATEGY INFLUENCES ON THE ORDER OF ENTRYEFFECT FOR CONSUMER PACKAGED GOODS

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.