Tag Archives: product

  • First Mover Advantage in an Internet-enabled Environment: Conceptual Framework and Propositions

    Varadarajan Yadav Shankar JAMS 2008

    by Rajan Varadarajan, Manjit Yadav, and Venkatesh Shankar

    This article was published in the Journal of Academy of Marketing Science, 36 (2008), 293-308.

    The competitive market environment has evolved from a physical market environment (PME) to an Internet-enabled market environment (IME) encompassing the physical and electronic marketplaces. At the same time, an increasing number of information products are available in both analog and digital forms. For information products in digital form, the IME also serves as a distribution channel. Such developments raise questions concerning the extent to which extant perspectives on first-mover advantage developed in the context of the PME hold in the IME, generally, and for information products specifically. We address this issue by developing a conceptual framework that focuses on selected sources of first-mover advantage delineated in the extant literature and advance propositions concerning sources that will have a greater or lower effect in the IME relative to the PME. A central message for first-movers in the IME that emerges from our conceptual analysis is to focus on achieving superior positions in resources that would enable them to get close to the customers fast, create switching costs, and retain them though ongoing investments in multi-faceted innovations. A second message that emerges for first-movers in the IME is they must take note of and make strategic adjustments for the potentially diminished significance of some traditional sources of first-mover advantage. These sources include spatial preemption, preemptive investment in capacity, and consumers’ choice behavior under conditions of uncertainty about product quality. We discuss the implications for further conceptual and empirical work in this area of increasing significance.

  • New Product Preannouncements and Shareholder Value: Don’t Make Promises You Can’t Keep

    Sorescu_Shankar_Kushwaha_JMR_2007

    by Alina Sorescu, Venkatesh Shankar, and Tarun Kushwaha

    This article was published in Journal of Marketing Research, 44 (August 2007), 464-489.

    New product preannouncements are strategic signals that firms direct at their customers, competitors, channel members, and investors. They have been touted as effective means of deterring competitor entry, informing potential customers, and even tipping the balance of technological standard battles in favor of the preannouncing firms. However, preannouncements also carry the risks of unwanted competitive reaction and the negative consequences of undelivered promises. From a shareholder value standpoint, do the benefits outweigh the risks of preannouncing? To address this question, the authors build on agency and signaling theories to develop hypotheses about the effects of preannouncements on shareholder value, and they empirically test these hypotheses on a sample of software and hardware new product preannouncements. The findings indicate that the financial returns from preannouncements are significantly positive in the long run. They show that preannouncements generate positive short-term abnormal returns only for firms that offer specific information about the preannounced product. The authors also show that firms earn positive long-term abnormal returns after a preannouncement if they continue to update the market on the progress of the new product. Both the short-term and the long-term returns are further magnified if the reliability of the preannouncement (i.e., the credibility of the preannouncing firm) is high. The findings offer executives of preannouncing firms clear guidelines on how to manage communications in the market to extract financial value from new product preannouncements.

  • Late Mover Advantage: How Innovative Late Entrants Outsell Pioneers

    Shankar_Carpenter_Krishnamurthi_JMR_1998

    by Venkatesh Shankar, Gregory S. Carpenter, and Lakshman Krishnamurthi

    This article was published in Journal of Marketing Research, 35 (February 1998), 54-70.

    Although pioneers outsell late movers in many markets, in some cases, innovative late entry has produced some remarkably successful brands that outsell pioneers.  The mechanisms through which innovative late movers outsell pioneers are unclear.  To identify these mechanisms, we develop a brand-level model in which brand sales are decomposed into trials and repeat purchases.  The model captures diffusion and marketing mix effects on brand trials and includes the differential impact of innovative and non-innovative competitors’ diffusion on these effects.  We develop hypotheses on how the diffusion and marketing mix parameters of the brands will differ by market entry strategy (pioneering, innovative late entry, and non-innovative late entry).  We test these hypotheses using data from 13 brands in two pharmaceutical product categories.  The results show that an innovative late mover can create a sustainable advantage by enjoying a higher market potential and a higher repeat purchase rate than either the pioneer or non-innovative late movers, by growing faster than the pioneer, by slowing the pioneer’s diffusion, and by reducing the pioneer’s marketing spending effectiveness.  Innovative late movers are asymmetrically advantaged in that their diffusion can hurt the sales of other brands, but their sales are not affected by competitors’ diffusion.  In contrast, non-innovative late movers face smaller potential markets, lower repeat rates and less marketing effectiveness compared to the pioneer.

  • Inferring Market Structure fom Customer Response to Competing and Complentary Products

    Elrod_Shocker__- Shankar_MLetters_2002

    by Terry Elrod, Gary Russell, Allan D. Shocker, Rick L. Andrews, Lynd Bacon, Barry L. Bayus, J. Douglas Carroll, Richard M. Johnson, Wagner A. Kamakura, Peter Lenk, Josef A. Mazanec, Vitala R. Rao, and Venkatesh Shankar

    This article was published in Marketing Letters, 13 (3), 219-230, 2002.

    We consider influences on market structure, arguing that market strucure should explain the extent to which any given set of market offerings are substitutes or complements. We describe recent additions to the market structure analysis literature and identify promising directions for new research in market structure analysis. Impressive advances in data collection, statistical methodology and information technology provide unique opportunities for researchers to build market structure tools that can assist “realtime” marketing decision-making.