The impact of low-price brands on the order of entry advantage

Authors

Dean Wilkie, University Of New South WalesFollow
Lester W. Johnson, University of WollongongFollow
Lesley White

RIS ID

61873

Publication Details

Wilkie, D., Johnson, L. & White, L. (2012). The impact of low-price brands on the order of entry advantage. Journal of Marketing Management, 28 (7-8), 957-973.

Abstract

The objectives of this research are to investigate (1) if a later entrant can reduce an order of entry effect by positioning itself as a low-price brand; and (2) if the type of low-price brand impacts the effectiveness of this strategy. The impact of a low-price strategy on the order of entry effect has been modelled using three categories of over-the-counter medicines. The results indicate that, in a majority of categories and dependent on the type of low-price brand, a low-price strategy can reduce the market share penalty for being a later entrant. In addition, the results provide evidence that leveraging an existing store brand name does not provide a strategic advantage over establishing a new brand name. The implications for managers is that a low-price brand provides a motivating point of difference for consumers, which shifts brand preferences and market share away from the pioneer brand.