ISSN 1822-6515
EKONOMIKA IR VADYBA: 2007. 12
ISSN 1822-6515
ECONOMICS AND MANAGEMENT: 2007. 12
DETERMINING FOLLOWING ADVANTAGE AT THE INITIAL STAGE
OF NEW PRODUCT INTRODUCTION
Indr Pikturnien
Vilnius University, Lithuania, [email protected]
Abstract
Debate whether pioneering or following provides more advantages for the company is long lasting in
scientific literature. There are gains and losses on both sides, depending on which indicator in what particular
market situation was studied. When the follower enters the market at the stage of decision making, after the
pioneer has created the knowledge about new product and persuaded to use it, following advantage should
emerge due to the peculiarities of advertising processing: consumers process advertising in low involvement
condition, they recall advertisements incorrectly, assign brand claims to wrong brands, and forget certain
information over time.
The factorial laboratory experiment was designed to test the premises. The results of the experiment
indicate that following advantages emerge more often, if measured by product category recall, brand and
advertising claim recall, and brand preferences. The hypothesis, that when the follower enters the market at
the decision making stage, it benefits from pioneer’s advertising input at the first two stages, was confirmed.
The emerging following advantages are significantly altered by pioneers’ or followers’ brand familiarity.
Keywords: pioneering advantage, following advantage, advertising processing, brand familiarity,
brand preference, factorial experiment.
Introduction
Debate whether pioneering or following advantages emerge when companies enter markets with new
products lasts for more than three decades. The greatest problem in pioneering vs. following advantage
research is inability to encompass all possible variables and market, product, industry factors of dynamic
business environment in the research methodology, and to develop a single algorithm, how pioneering or
following advantage should be determined having regard to all possible factors. As this task can hardly be
accomplished, the influence of particular factors or situations on pioneering and following advantages has
become frequent subject of research interest during the recent decade.
Particular situation was selected for the research presented in the article. It is the situation, when the
follower enters the market after the pioneer, who has advertised his new product first, has gone through the
stages of knowledge and persuasion, and consumers are approaching or have reached the stage of decision
making. It is assessed, what advantages the follower has gained due to pioneering advertising, and how these
advantages were affected by the brand familiarity of the pioneer or the follower.
The aim of the article is to contribute to the scientific debate of pioneering and following advantage,
stressing the importance of methodology of pioneering or following advantage research strictly defined
situations and providing the empirical evidence of the following advantage in particular market situation.
Debate on pioneering vs. following advantage
Historically pioneering first was declared to be the most rewarding strategy; a vast number of scholars
maintain this position up to date. Pioneering is supposed to guaranty consumer preferences for the pioneer
(Alpert and Kamins, 1995a; Denstadli et al., 2005), more clearly formed opinion on pioneering brand (Kardes
and Kalyanaram, 1992), prototipicality (Carpenter ir Nakamoto, 1989), trust, if the product trial was
successful (Schmalensee, 1982). Pioneers benefit from economies of scale, created market entry barriers,
monopolistic profit, preemption of scarce assets (Lieberman and Montgomery, 1998) and distributors’ space
(Schmalensee, 1987), negative approach of distributors towards identical followers (Alpert and Kamins,
1995b, Alpert et al., 2001), and patents (Robinson, 1988). Empirical evidence proves, that pioneers enjoy
bigger market share (Robinson and Fornell, 1985; Urban et al., 1986; Robinson, 1988; Robinson and Min,
2002). Pioneers have higher survival rates (Robinson and Min, 2002), especially when products are
continuous innovations (Min et al., 2006). As pioneers‘ sales and profitability are higher (Mittal and Swami,
2004), pioneers guarantee more shareholder wealth than followers (Hun et al. (2000).
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However, more than three decades ago it was pointed out that pioneering is not necessarily the best
strategy, as it is very risky and costly (Lewitt, 1966). Followers that enter markets when new products have
developed into successful categories or subcategories avoid mistakes, have lower imitation costs (Mansfield
et al., 1981), also they enjoy markets with established legal rules, developed technology and trained
employees (Bryman, 1997). They avoid a very long time span between product introduction and product
diffusion to the level that is necessary for successful commercializing (Schnaars, 1994). Followers’
profitability, according to some empirical evidence, is higher (Boulding and Cristen, 2001, 2003).
Interestingly, there is sufficient empirical evidence, that contradicts the above mentioned one, claiming that
followers capture higher market share (Golder and Tellis, 1993), and hold higher survival rates (Golder and
Tellis, 1993; Lilien and Yoon, 1990), especially when products are discontinuous innovations (Min et al.,
2006).
More than a decade ago it was pointed out that the particular factors or situations that cause the
emergence of pioneering or following advantages should be studied (Kerin et al., 1992), rather than
searching for universal algorithm. During the recent decade several papers on the issue of pioneering vs.
following advantages in the particular situations have appeared in the scientific literature.
Kleiser and Wagner (1999) have proposed that for high involvement product categories followers
should be chosen more often, whereas in low involvement product categories pioneers should establish
advantages. Regard also should be given to the fact, whether consumers are inclined to keep to their previous
or current decisions, or not. Bohlmann et al. (2002) state that pioneering vs. following advantage depends on
consumer valuations on quality and variety in the product category, and on vintage effects. Long lasting
pioneering advantage should be won in markets where both consumption and technologies develop very
slowly, whereas in markets, where products diffuse fast and technologies change rapidly, only following
advantage emerges (Suarez ir Lanzola, 2005). Oakley et al. (2005) have determined that pioneering or
following advantage is dependent not only on brand familiarity of the pioneer and the follower, but also on
the indicator how well the brand represents the product category. If both pioneering and following brands are
familiar and represent product categories well, more preferences are given to the late follower. Min et. al.
(2006) prove that when product novelty ratio is high, followers gain more advantages, however, if product
novelty ratio is low (continuous innovations), pioneers gain sufficient advantages over the followers.
Background to the following advantages at the initial stage of product introduction due to the
peculiarities of advertising processing and brand familiarity
Having regard to communication model of new product diffusion (Rogers, 1995), the presumption is
raised, that followers have lower investment into advertising at the initial stage of new product introduction.
Initial stage of new product introduction in this paper is considered to cover stages of knowledge, persuasion
and decision making, according to the model of new product diffusion (Rogers, 1995). Pioneers are the
single actors in the first steps (knowledge and persuasion) of the diffusion of a new product. They have a
difficulty to indicate the first users of the product category and to inform them about the novelty. Advertising
plays a major role in the steps of knowledge creation and persuasion to use the product, as interpersonal
communication is weak or non-existent. If the follower enters the market on the step of decision making,
other (non-mass) communication can be sufficient for a product to diffuse further, moreover, the follower
benefits from the knowledge and persuasion that is created by the pioneer.
Although the pioneer, being first in the market, has a unique possibility to gain many advantages, there
is a basis to believe that peculiarities of advertising processing and brand selection are more beneficial for
the follower. The reasons for the following advantages to emerge at the initial stage of new product
introduction are the following: highly selective attention for advertising, unconscious, accidental and
incorrect advertising learning due to low involvement in many products and advertising messages, limited
effectiveness of advertising repetition, interference and decay of advertising messages in consumers’ mind.
Attention for advertising and its perception and memory are highly selective. Consumers due to
advertising overload, low interest in products and little importance of the majority of buying decisions pay
attention only to the small part of them. A big part of messages that were noticed are further perceived and
recalled incorrectly, as consumers do not put effort to recall them properly.
Low involvement in a number of products (Vaughn, 1986) and in advertising messages (Krugman,
1965; Greenwald and Leawitt, 1984) is one of the reasons why advertising messages are recalled incorrectly.
According to Krugman (1965), to cause memory changes in low involvement advertising message
processing conditions, a number of exposures to advertising is necessary. Still, even a repetitive exposure to
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advertising does not guarantee correct advertising learning, as under low involvement conditions advertising
is learned as a waste, unwanted and trivial information.
There is sufficient evidence that advertising repetition has limited effectiveness. The relationship of
advertising repetition and advertising effectiveness holds an inverted U form: advertising wears in, reaches
the peak of its effectiveness (if measured by consumer memory for advertising), and then wears out
(Pechman and Stewart, 1989).
Any learned information decays over time in consumer mind. Memory has limited capacity and cannot
be activated by all stimuli (Just and Carpenter, 1992). Initial information source is retrieved with more and
more difficulties over time, thus causing memory errors (Schmolck et al., 2000). Different stimuli compete
for the same response (McGeouch, 1932), therefore product category or advertising claim as stimuli can
provide wrong response (competing brand rather than the one that has been advertised, if the previous is
associated with the stimuli stronger). Sufficient evidence that advertising is recalled incorrectly, attributing
wrong brand to advertising claim was provided by Burke and Srull (1988), Kent and Alen (1994), Kent and
Kellaris (2001), Law (2002), Laroche et al. (2002). There is a basis to assume that advertisements are more
strongly related to the product category than to the particular brand (Kent and Kellaris, 2001). Moreover,
demonstration of one brand depending to the product category indirectly increases recall of other brands in
the product category, forming the set of alternatives for choice (Nedungadi, 1990). Thus pioneers, who have
invested both into consumers’ knowledge about the product category in general and convinced to use it,
cannot be sure that under problem arousal their brand will be associated with advertising claim and recalled.
If information about product category and product functions is recalled better than brand names and
advertising claims, that means, pioneers have invested into primary demand creation more than followers.
Moreover, pioneers who invest into awareness of the product category, simultaneously invest into the recall
of competitor’s brand after mentioning the product category, thus causing a pioneering disadvantage.
H1: Following advantage at the initial stage of new product introduction appears because consumers
recall advertising information about product categories and product functions better than information about
brands or advertising claims, thus the followers burden lower primary demand creation costs, if compared to
pioneers.
Peculiarities of advertising learning might be more beneficial to the follower, as according to response
set suppression theory by Postman, Stark and Fraser (1968), individuals are more likely to recall the last seen
response to the stimuli. If we consider brand as a response to the product category, the follower’s brand is
more likely to be recalled, as by presumption it was the latter brand seen in advertising.
H2: Following advantage at the initial stage of new product introduction appears because consumers
due to advertising processing peculiarities recall following brands better.
A well-known brand provides numerous marketing advantages for a company. One of them is its
ability to a certain extent (but not completely) resist competitive interference effects, caused by
advertisements of other brands in the category, or similar visual or other elements in advertisements (Kent
and Kellaris, 2001, Kumar and Krishnan, 2004). According to response competition theory (McGeouch,
1932), the brand that is more associated with the product category (by presumption, familiar brand), should
be recalled better. This evidence puts a basis for a presumption that brand familiarity (known versus
unknown) will mitigate following advantages that are gained at the first stage of new product introduction.
H3: Followers’ brand recall and recognition, if compared to the pioneers’, depends on pioneering and
following brand familiarity.
Methodology
The factorial longitudinal experiment was conducted to test the hypotheses. Design was 2 (pioneer vs.
follower) x 2 (familiar vs. unfamiliar pioneer’s brand) x 2 (familiar vs. unfamiliar follower’s brand).
Longitudinal dimension allowed to simulate order of entry (the 1st and the 2nd sessions) and test dependent
variables after delay (the 3rd session). Session number was a within subject variable. Factorial dimension
allowed to evaluate effects of independent variable (brand familiarity) on consumer memory. Pioneer’s
brand familiarity was a within subject variable, as all participants saw the same familiar and unfamiliar
pioneering brands. Follower’s brand familiarity was between subject variable.
Test variables were free and cued recall and recognition of product category, product functions, brand
name and advertising claim, ability to attribute brand to particular advertising claim.
195 undergraduate students of Vilnius University, faculties of Economics and Communication, have
participated in the main experiment. They were randomly assigned to particular experimental conditions.
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Aiming for control of external factors, new products, brands, advertising claims and design of advertisements
were selected during the pre-test procedures. Participant of pre-test procedures belonged to the same group
as participants of the main procedure (undergraduate students). The products were supposed to be considered
as new, believable and be relative for the audience. Disposable tooth brushes and electronic guide with
extended functions were selected. Familiar brands were supposed to be equally well preferred. Aquafresh
and Blend-a-Med were selected for the disposable tooth brushes. Sony was selected for electronic guide
(experimental conditions did not require two familiar brands). Unfamiliar brands were fictitious two syllable
names which students have selected as well representing product category. Crexin was selected for
disposable tooth brushes (experimental conditions did not require two unfamiliar brands). Mostel and Siroka
were selected for electronic guide. Advertising claims and advertising layout were supposed to be equally
well preferred for the pioneers and the followers. Other information appearing on the advertisements about
the product category and product functions was the same for the pioneers and the followers.
Two test advertisements were placed in a fragment of the magazine, which simulated typical magazine
content. During the first session students received the fragment of the magazine, which contained
“pioneers’” advertisement with familiar and unfamiliar brand. Disposable tooth brush was “introduced” with
familiar brand (Aquafresh), electronic guide was introduced with unfamiliar brand (Mostel). Involvement
into advertising message processing was manipulated as described in (Laczniak et al., 1989), low advertising
message involvement was achieved. Test variables were measured after participants had completed memory
clearing task.
Two weeks later, during the second session the same students received other magazines that contained
“followers’” advertisements with familiar and unfamiliar brands: depending on the experimental condition
students were exposed to either familiar (Blend-a-Med) or unfamiliar (Crexin) brand for the tooth brush, and
familiar (Sony) or unfamiliar (Siroka) brand for the electronic guide. Involvement again was manipulated
and tested using methodology of Laczniak et al. (1989), low advertising message involvement was achieved.
Test variables were measured after participants had completed memory clearing task.
During the third session students did not receive any magazines, but only filled the questionnaire in to
measure recall, recognitions, and ability to attribute after two weeks delay.
Results
The results indicated that product category and product functions were recalled much better than brand
claim and brand name. Recall of the two latter variables increased over time, the same situation was with the
recognition of test variables (see picture 1). Thus H1 was confirmed.
200
160
140
180
120
160
100
140
80
Free recall
No. of recalls
Product category
40
Product functions
20
Brand claim
0
Brand name
1
2
No. of recognitions
120
60
Recognition
100
Product category
80
Brand claim
60
Brand name
1
3
2
3
Session No.
Session No.
Figure 1. Number of recalls and recognitions of product category, product functions, brand claim and brand
name in three experimental sessions
When free recall of product category, product functions, brand claim and brand name was compared
between pioneers and followers in general, the results indicated that free recall of follower’s variables was
449
much better (e2(1)=14,933, p= .000; e2(1)=16,191, p= .000; e2(1)=6,545, p= .011, e2(1)=31,508, p= .000
respectively), and remained on the same level after the third session. However, there was a difference in the
results when brand familiarity was introduced. When both pioneering and following brands were familiar,
the recall of almost all test variables was equally good (product category: e2(1)=0,727, p= .394, product
functions: e2(1)=1,459, p= .227, brand name: e2(1)=3,596, p= .058, brand claim: (e2(1)=5,444, p= .020
(preference for the follower)). When both pioneering and following brands were unknown, three out of four
followers’ indicators were recalled better (product category: e2(1)=17,640, p= .000; product functions:
e2(1)=5,452, p= .020; brand name: e2(1)=11,0, p= .000, brand claim: e2(1)=0,667, p= .414). When the
pioneer was familiar, and the follower was unfamiliar, the pioneer enjoyed much better recall of brand name
(e2(1)=12,8, p= .000); however, recall of product category and functions was better during the second and
third sessions (e2(1)=1,723, p= .189; e2(1)=4, p= .046). Results did not change over time. When the pioneer
was unfamiliar and the follower was familiar, much stronger following advantages existed (product category:
e2(1)=6,48, p= .011; product functions: e2(1)=8,067, p= .005; brand name: e2(1)=49 p= .000, brand claim:
(e2(1)=0,111, p= .739). The following advantage persisted over time.
General recognition of product category and brand claim was the same for the pioneers and the
followers (e2(1)=0,421, p= .516, (e2(1)=0, p= 1.000 respectively); however, recognition of brand name was
better for the followers e2(1)=17,473, p= .000). No significant differences were observed when both the
pioneers and the followers were familiar (e2(1)=0,036, p= .850; e2(1)=0,780, p= .377; e2(1)=1,373, p= .241,
respectively). Recognition of unfamiliar pioneer‘s versus unfamiliar follower‘s product category and brand
claim was the same (e2(1)=0,250, p= .617; e2(1)=0,243, p= .622 respectively), however, follower‘s brand
name was recognized more often (e2(1)=5,765, p= .016). Recognition of familiar pioneer’s versus unfamiliar
follower’s product category and brand claim was the same (e2(1)=0,015, p= .903; e2(1)=1,723, p= .189
respectively), however, pioneers brand was recognized more often (e2(1)=8,067, p= .005). This pioneering
advantage has diminished during the third session, both pioneer’s and follower’s brands were recognized
equally well (e2(1)=0,231, p= .631). The same level of recognition was observed when the pioneer was
unfamiliar and the follower was familiar (product category: e2(1)=0,495, p= .482, brand claim:(e2(1)=1,333,
p= .248). Follower’s brand was recalled much better immediately after the “entry” (e2(1)=29,16, p= .000)
and after two weeks (e2(1)=7,806, p= .005).
Ability to attribute advertising claim to the brand additional stimuli was extremely low in all sessions.
The fact that consumers are not capable to attribute advertising claims to the particular brand names
demonstrates, that advertising claims are attributed to product category rather than to the brand. This
phenomena decreases advertising effectiveness of competing companies. Better position is taken by the
company whose brand name is more strongly associated with the whole product category.
Brand claim and product category as the cues for a brand name recall were much more effective to
activate follower’s brands (product category as a cue: e2(1)=17,618, p= .000; brand claim and a cue:
e2(1)=7,313, p= .007). However, there was no significance in cued recall, when both brands were familiar
(product category as a cue: e2(1)=0,865, p= .352; brand claim and a cue: e2(1)=2,174, p= .140). When both
brands were unfamiliar, followers were recalled better (product category as a cue: e2(1)=8,895, p= .003;
brand claim and a cue: e2(1)=9,308, p= .002). When pioneer was familiar, and follower was unfamiliar,
product category as a cue activated pioneering brand more often (e2(1)=10,522, p= .001); brand claim as a
cue did not cause any differences in brand recall (e2(1)=3,240, p= .072). When only the follower was
familiar, all cues were more beneficial to him (product category as a cue : e2(1)=35,579, p= .000; brand
claim and a cue: e2(1)=10,796, p= .001).
The summary of all results demonstrates that in general following advantage is observed: pioneers
have to invest in consumer education presenting product category and product functions, whereas recall and
recognition of advertising claims and brand names is delayed. Much better recall is monitored for the
follower’s brand name. Thus H2 is confirmed. Recognition is not so beneficial for the followers; however, it
is not beneficial for the pioneers either.
Familiarity of a brand, as expected, alters the effects of following advantage: (1) familiar pioneer’s
brand itself can strengthen pioneering advantage and is recalled better, when the follower is unfamiliar
brand, (2) when both brands are familiar, pioneering and following effects are more or less equal, (3) when
familiar follower is enters the market after unfamiliar pioneer, following advantage becomes extremely
evident.
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Thus, peculiarities of advertising processing, as a factor of following advantages in cases when the
follower enters the market at the decision making stage, is not unambiguous. Effects of following advantages
at this stage are significantly altered by brand familiarity of both pioneers and followers. In some cases,
when pioneer possesses well familiar brand, whereas follower does not, the follower can gain nil following
advantages by entering market at the decision making stage.
Conclusions
The experiment which simulated order of entry of pioneers and followers with brand names of
different brand familiarity proved that pioneers suffer primary demand creation costs, as product categories
and functions are recalled much better than brands or advertising claims. Advertising recall and recognition
variables demonstrate that the peculiarities of advertising recall are more beneficial to the follower.
Consumers are more likely to recall and recognize following brand, if the pioneer does not advertises at the
moment of followers’ brand introduction. Brand familiarity can significantly alter these results: familiar
pioneering brands can negate some following advantages when the followers are familiar, or even gain
pioneering advantages, when the followers are unfamiliar.
The results are valid under low advertising message involvement conditions. Thus, future
research should evaluate whether the magnitude of following advantages would be the same under
high advertising message involvement conditions.
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Indr Pikturnien
SEKIMO PRANAŠUMO NUSTATYMAS PIRMOJOJE NAUJOS PREK S VEDIMO STADIJOJE
Santrauka
Raktiniai žodžiai: pirmavimo pranašumas, sekimo pranašumas, reklamos siminimas, prek s ž-ženklo žinomumas, faktorinis
eksperimentas.
Straipsnio tikslas yra prisid ti prie mokslin s diskusijos pirmavimo ir sekimo pranašum klausimu, ypatingai pabr žiant
metodologijos, kurioje pirmavimo arba sekimo pranašumai tiriami aiškiai apibr žtoje situacijoje, svarb>, bei pateikiant empirinius
duomenis, kaip ir kod l sekimo pranašumai atsiranda konkre7ioje rinkos situacijoje.
Diskusija, ar mon s gyja pirmavimo, ar sekimo pranašumus vesdamos naujas prekes rink>, tCsiasi jau daugiau nei tris
dešimtme7ius. Istoriškai pirmavimas laikomas geresne strategija; dauguma mokslinink iki šiol palaiko ši> nuomonC. Pirmavimas
monei garantuoja geresn preki ženkl siminim>, dažnesn pasirikim>, visos prek s kategorijos prototipiškum>. Pionieriai gali
susikurti jimo rink> barjerus, gauna monopolistin peln>, užima retus išteklius ir ribot> viet> paskirstytoj lentynose.
Ta7iau daugiau nei prieš tris dešimtme7ius buvo atkreiptas d mesys tai, jog pirmavimas neb tina yra palankiausia strategija
monei, kadangi nauj preki vedimas pirmiems yra labai brangus ir rizikingas. Sek jai, eidami rink> tuomet, kai naujos prek s
priimamos vartotoj , išvengia klaid , patiria žemesnius kaštus preki imitavimui, be to, rinkoje jau yra nusistov jusi teisin baz ,
išvystytos pakankamai tobulos technologijos bei atsiradC kvalifikuot darbuotoj .
Didžiausia pirmavimo ir sekimo pranašum tr kum problema yra ta, kad ne manoma apimti vis rinkos, pramon s, prek s
ir kit dinamiškos verslo aplinkos faktori vienoje metodologijoje, ir išvesti viening> algoritm>, kaip, vertinus juos visus, nustatyti
pirmavimo ar sekimo pranašumus. Jau prieš dešimtmet buvo pasteb ta, kad neder t ieškoti vienareikšmio atsakymo klausim>,
kokie – pirmavimo ar sekimo pranašumai – susidaro, o tirti konkre7ias rinkos situacijas ir konkre7i veiksni tak> jose
susidarantiems sekimo pranašumams (Kerin et al., 1992). Pastar>j dešimtmet konkre7i veiksni taka pirmavimo arba sekimo
pranašumams yra gana dažnas mokslini tyrim objektas.
Straipsnyje taip pat modeliuojama konkreti situacija, apsibr žiant veiksnius, lemian7ius pirmavimo arba sekimo pranašum>,
bei atsiribojant nuo kit veiksni . Tai situacija, kai sek jas veda savo prekC rink> po to, kai pionierius, reklamuodamas savo prekes,
jau pra jo žini vartotojams suteikimo bei tikinimo vartoti etapus, ir vartotojai jau priart jC arba pasiekC sprendimo pri mimo etap>.
vertinama, kok pranašum> sek jas gavo d l pionieriaus reklamos dirbio, ir kaip šiuos pranašumus veikia pionieri ir sek j prek s
ženklo žinomumas.
Situacijai simuliuoti buvo atliktas faktorinio dizaino eksperimentas. Eksperimentin s s>lygos imitavo pionieri ir sek j
vedim> rink> žemo sitraukimo reklamos žinutC s>lygomis. Pionieriai ir sek jai buvo vedami su skirtingo žinomumo preki
ženklais (žinomais ir nežinomais). Eksperimento rezultatai atskleid , kaip reklamos atsiminimo ypatumai gali sukurti sekimo
pranašum>, bei kaip j veikia prek s ženklo žinomumas.
Eksperimento rezultatai rodo, jog šioje konkre7ioje situacijoje yra daugiau prielaid sekimo pranašumams atsirasti
(matuojant prek s kategorijos, prek s ženklo ir reklamos teiginio atsiminimo dažnumu). Kadangi prek s ženklo ir prek s funkcij
atsiminimas, lyginant su prek s ženklo ir reklamos teiginio atsiminimu, v luoja, galima teigti, jog pionieriai kuria pirminC paklaus>
prek s kategorijai ir patiria didesnius reklamos kaštus. gyjamus sekimo pranašumus bei preferencijas preki ženklams gali
reikšmingai paveikti prek s ženklo žinomumas.
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