First Impressions Stick: Market Entry Strategies and Category Priming in the Digital Domain

Abstract

AbstractThe rise of the ‘digital age’ presents unique challenges for firms entering new markets and deciding ‘where’ to compete – a pivotal topic in corporate strategy. Particularly, it is not clear what the opportunities and implications are for digital new entrants as they position their disruptive business offerings in the category system, in particular vis‐à‐vis non‐market stakeholders. In this article, we qualitatively investigate how two icons of the ‘sharing economy’, Uber and BlaBlaCar, pursued two distinct categorization strategies which were incumbent‐focused and economic versus emergent‐focused and non‐economic. Our longitudinal comparative case study reveals how digital new entrants, through self‐categorization, can enduringly impact the nature of the responses of non‐market stakeholders. The mechanism at play is ‘category priming’ – the process of directing stakeholders’ selective attention towards, or away from, the commonalities shared with a specific market category – and its stickiness over time. In particular, the distinct categorization strategies primed stakeholders to focus (Uber) or not focus (BlaBlaCar) on similarities between the entrant and an established category, which triggered polarized responses from media and regulators and resulted in a ‘sticky’ association regardless of repositioning efforts. Our contribution dissects the constituents and consequences of these strategies and discusses implications for future research on digital market entry, strategic categorization, and business models.