Investigating the Relationship Between Time in Market and Pioneering Advantage

Investigating the Relationship Between Time in Market and Pioneering Advantage

By
Christina L. Brown, James M. Lattin
Management Science.
1994, Vol. 40, Issue 10, Pages 1361-1369

In field studies based on pre-test market and scanner data, researchers have found evidence of pioneering advantage in the form of an order-of-entry effect: a permanent share advantage that is greatest for the first brand to enter a market and smaller for each subsequently entering brand. Conceptually, an order-of-entry effect implies that the share advantage of a market pioneer over the second entrant is constant, regardless of the length the of time the pioneer is alone in the market or the length of time since the entry of the second brand. We argue that pioneering advantage is also related to a brand's length of time in the market: the longer the brand's time in market (during which time it can impact consumer learning and influence consumer perceptions and preferences), the greater its relative share advantage. We present a parsimonious model of this time-in-market effect and test of model using two data sources: cross-category data collected and analyzed by Urban et al. (1986) and regional roll-out data for a single product category.