Competitive Strategies for Late Entry into a Market with a Dominant Brand

Gregory S. Carpenter and Kent Nakamoto
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Gregory S. Carpenter: J. L. Kellogg Graduate School of Management, Northwestern University, Evanston, Illinois 60208
Kent Nakamoto: Karl Eller Graduate School of Management, University of Arizona, Tucson, Arizona 85721

Management Science, 1990, vol. 36, issue 10, 1268-1278

Abstract: This paper considers optimal positioning, advertising, and pricing strategies for a firm contemplating entry in a market dominated by an entrenched competitor. Drawing on behavioral research on consumer preference formation, we develop an individual-level model that reflects differing consumer responses to similar products offered by the dominant brand and later entrants---an effect we term asymmetric preferences. From the resulting aggregate market response model, we derive several competitive implications, notably (1) that preference asymmetry can make a differentiated late entry strategy optimal even if preferences would appear to dictate otherwise, and (2) that me-too strategies are not equilibrium late entry strategies. More generally, our analysis suggests that preference asymmetry can contribute to the persistent competitive advantage of dominant brands.

Keywords: competition; late entry strategy; preference asymmetry; dominant brands (search for similar items in EconPapers)
Date: 1990
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Citations: View citations in EconPapers (32)

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