Brand Capital and Incumbent Firms' Positions in Evolving Markets

Louis A Thomas

The Review of Economics and Statistics, 1995, vol. 77, issue 3, 522-34

Abstract: In many advertising-intensive industries, one observes market share persistence, i.e., firms maintaining lead market shares over long periods of time. The author hypothesizes that firms that have the largest stock of well-established brands, a stock that he terms brand capital, are most likely to introduce new products in response to new market information about consumer preferences. Firms with less brand capital delay their introductions until the uncertainty concerning the market size is reduced. The author presents empirical support in a study of new product introductions in the U.S. beverage industry. Copyright 1995 by MIT Press.

Date: 1995
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