Pushed into a crowd: Repositioning costs, resources, and competition in the RTE cereal industry

Young Hou and Dennis Yao

Strategic Management Journal, 2022, vol. 43, issue 1, 3-29

Abstract: Research summary This article exploits a natural experiment involving self‐regulation in the ready‐to‐eat (RTE) breakfast cereal industry to evaluate the performance impact of product repositioning. It then examines how a product's brand equity value declines with repositioning distance and explores various nonprice responses of firms to increased own and rival competition. Self‐regulation led to a crowding of the product space by forcing differentiated products to become more similar. We find that products constrained by regulation performed relatively worse than unconstrained products. Furthermore, brand equity specific to a product was tightly linked to existing product positions. Increased competition also led to increased brand equity investments and some products with strong brand equity repositioned more aggressively than those with weak brand equity. Managerial summary This article illustrates how firms respond to newly‐imposed regulatory constraints and how product brand equity is tightly linked to underlying product positions. The analysis is an empirical examination of a self‐regulatory initiative that placed advertising restrictions on high sugar RTE breakfast cereal products targeted toward children. We explore the impact of the regulation on performance and then use the setting to examine the connection between brand equity and changes in product positions. Finally, we examine firm responses to rival entry that include exiting, repositioning, and increasing investments in differentiation.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1002/smj.3336

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:stratm:v:43:y:2022:i:1:p:3-29

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0143-2095

Access Statistics for this article

More articles in Strategic Management Journal from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().