Being the first entrant and getting stuck in the middle

Abstract

PurposeThis paper aims to examine how pioneering advantage interacts with the compromise effect generated by new product entries. Building on prior work on pioneering advantage and extreme aversion, this research moves toward understanding how the choice share of a pioneer realigns as a consequence of new product entries generating compromise-like scenarios.Design/methodology/approachThe authors run three experiments to test their propositions. The authors present one study which documents the effect. The second study provides process evidence. The third study suggests how brands can neutralize the adverse effect on their share generated by the followers’ entry/positioning.FindingsIn three studies, the authors showed that when a pioneering product becomes intermediate in a choice set, its share is more adversely affected than when it becomes extreme. The authors show that this depends on consumers’ propensity to use non-compensatory decision rules in the presence of a pioneering alternative. The authors also document that the relative disadvantage of the intermediate pioneer can be overcome when the reasons for selecting an intermediate alternative based on a compensatory decision rule are restored.Practical implicationsThe research provides guidelines for managers wanting to enter product categories where a pioneer already exists. The authors show that opting for an extreme position that renders the pioneer intermediate can be rewarding. In contrast, being the second extreme player in a market where the pioneer becomes extreme reduces the expected share of this last entrant.Originality/valueThe authors’ contribution is in showing that this decision strategy can clash with the rule consumers generally use in a compromise setting and that this clash generates two different effects when the pioneer becomes intermediate or extreme.