Gurumurthy Kalyanaram

An Empirical Analysis of Latitude of Price Acceptance in Consumer Package Goods

Scanner panel data analyses for sweetened and unsweetened drink categories (with four brands in each) support the presence of a region of price insensitivity around a reference price. The analyses also suggest that consumers with higher average reference price have a wider latitude of price acceptance. Consumers with a higher frequency of purchase (i.e., shorter average interpurchase time interval) are found to have a narrower latitude of price acceptance, because they are more aware of the range of price distributions. Finally, consumers with a higher average brand loyalty have a wider latitude of price acceptance, demonstrating greater tolerance of price fluctuations. Copyright 1994 by the University of Chicago.

Brand Retrieval, Consideration Set Composition, Consumer Choice, and the Pioneering Advantage

Recent research on the pioneering advantage has shown that consumers often prefer pioneering brands to follower brands. Recent research on consumer choice suggests that information about brands is filtered through a series of sequential cognitive processes. This study attempts to integrate these two separate lines of research by investigating the effects of pioneering on each stage of the multistage decision process. A within-subjects longitudinal experiment was conducted to simulate brand order of entry into a new market. We also developed a sequential logit model to isolate the direct impact of pioneering on each stage of the decision process while controlling for indirect effects of pioneering on previous stages. The results revealed that the pioneering brand (vs. followers) is more likely to be retrieved, considered, and selected. Moreover, the results revealed that consumers are more likely to bypass consideration set formation when the choice decision is simple (vs. complex). Theoretical and practical implications of the results are discussed.

First-Mover Advantages from Pioneering New Markets: A Survey of Empirical Evidence

Market pioneers can develop first-mover advantages that span decades. The most general first-mover advantage that helps explain higher pioneer market share levels is a broad product line or brand proliferation. In markets for experience goods, pioneers tend to shape consumer tastes and preferences in favor of the pioneering brand. While the preliminary results vary by industry, they indicate that market pioneers donot tend to perish more often than later entrants. Accounting profits for market pioneers generally are lower in the first four years of operation, but higher thereafter. Overall, market pioneers follow innovative strategies that have high initial costs and risks, but yield high potential returns.

An Empirical Analysis of Follower Entry Timing Decisions

Followers frequently incur market share penalties due to delayed entry. How might they then respond to a pioneer? This paper attempts to answer this question. Followers are assumed to be able to respond by choosing a time interval of entry relative to the pioneer, and by focusing on consumer relative preferences for their brand. These choices potentially involve different trade-offs. For example, achieving higher relative preferences may result in an entry delay that would increase the leadtime. We argue that the followers response will depend on the magnitude of the pioneering effect. Our analysis of the ASSESSOR database indicates that followers respond primarily by reducing leadtimes. We further find that later followers achieve higher consumer relative preferences than earlier followers do. While these findings merit generalizability as they concern multiple brands and categories, many of which still exist, their implications should be qualified with caution since the data do not go beyond 1984.