TY - JOUR
T1 - The advantages of entry in the growth stage of the product life cycle
T2 - An empirical analysis
AU - Shankar, Venkatesh
AU - Carpenter, Gregory S.
AU - Krishnamurthi, Lakshman
PY - 1999/5
Y1 - 1999/5
N2 - In this article, the authors examine how the stage of product life cycle in which a brand enters affects its sales through brand growth and market response, after controlling for the order-of-entry effect and time in market. The authors develop a dynamic brand sales model in which brand growth and market response parameters vary by stage of life cycle entry, namely, by pioneers, growth-stage entrants, and mature-stage entrants. The authors estimate the model using data on 29 brands from six pharmaceutical markets. The results reveal advantages associated with entering during the growth stage. Growth-stage entrants reach their asymptotic sales level faster than pioneers or mature-stage entrants, are not hurt by competitor diffusion, and enjoy a higher response to perceived product quality than pioneers and mature-stage entrants. Pioneers reach their asymptotic sales levels more slowly than later entrants, and pioneer's sales, unlike later entrants' sales, are hurt by competitor diffusion over time. On the positive side for pioneers, buyers are most responsive to marketing spending by pioneers. Mature-stage entrants are most disadvantaged; they grow more slowly than growth-stage entrants, have lower response to product quality than growth-stage entrants, and have the lowest response to marketing spending.
AB - In this article, the authors examine how the stage of product life cycle in which a brand enters affects its sales through brand growth and market response, after controlling for the order-of-entry effect and time in market. The authors develop a dynamic brand sales model in which brand growth and market response parameters vary by stage of life cycle entry, namely, by pioneers, growth-stage entrants, and mature-stage entrants. The authors estimate the model using data on 29 brands from six pharmaceutical markets. The results reveal advantages associated with entering during the growth stage. Growth-stage entrants reach their asymptotic sales level faster than pioneers or mature-stage entrants, are not hurt by competitor diffusion, and enjoy a higher response to perceived product quality than pioneers and mature-stage entrants. Pioneers reach their asymptotic sales levels more slowly than later entrants, and pioneer's sales, unlike later entrants' sales, are hurt by competitor diffusion over time. On the positive side for pioneers, buyers are most responsive to marketing spending by pioneers. Mature-stage entrants are most disadvantaged; they grow more slowly than growth-stage entrants, have lower response to product quality than growth-stage entrants, and have the lowest response to marketing spending.
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U2 - 10.2307/3152098
DO - 10.2307/3152098
M3 - Article
AN - SCOPUS:0033247819
SN - 0022-2437
VL - 36
SP - 269
EP - 276
JO - Journal of Marketing Research
JF - Journal of Marketing Research
IS - 2
ER -