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Order-of-entry and the diffusion of trials in a new category

Author: Parker, Philip M. ; Gatignon, HubertINSEAD Area: Marketing Series: Working Paper ; 95/52/MKT Publisher: Fontainebleau : INSEAD, 1995.Language: EnglishDescription: 14 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: This paper builds on the recent literature on order-of-entry effects which indicates that it is critical to model the diffusion phenomenon of a new brand in order to estimate marketing mix elasticities and order-of-entry effects. More specifically the authors test hypotheses regarding the role of order-of-entry on the brand level trial process within a category. Consistent with these research hypotheses, the results demonstrate that a brand's trials and its pricing and advertising elasticities vary systematically as a function of competitive entry. Competitive influences (which are negative) increase as order of entry is delayed. Short term price elasticities are found to be an U relationship with the order of entry, whereby early followers have the highest elasticities, as compared to the pioneer and to the later followers. Avertising elasticities decline as the number of competitors increases
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This paper builds on the recent literature on order-of-entry effects which indicates that it is critical to model the diffusion phenomenon of a new brand in order to estimate marketing mix elasticities and order-of-entry effects. More specifically the authors test hypotheses regarding the role of order-of-entry on the brand level trial process within a category. Consistent with these research hypotheses, the results demonstrate that a brand's trials and its pricing and advertising elasticities vary systematically as a function of competitive entry. Competitive influences (which are negative) increase as order of entry is delayed. Short term price elasticities are found to be an U relationship with the order of entry, whereby early followers have the highest elasticities, as compared to the pioneer and to the later followers. Avertising elasticities decline as the number of competitors increases

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