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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Gregory S. Carpenter & Kent Nakamoto, 1990. "Competitive Strategies for Late Entry into a Market with a Dominant Brand," Management Science, INFORMS, vol. 36(10), pages 1268-1278, October.
    • Handle: RePEc:inm:ormnsc:v:36:y:1990:i:10:p:1268-1278
    DOI: 10.1287/mnsc.36.10.1268
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