Consumer Preference Formation and Pioneering Advantage

Abstract

Market pioneers outsell later entrants in both consumer and industrial markets. Entry barriers arising from preemptive positioning and switching costs have been advanced to explain this market share difference, termed “pioneering advantage.” However, empirical studies show that pioneering advantages are present even in mature markets in which brands reposition and switching costs are minimal. In these cases, the authors argue that pioneering advantage can arise from the process by which consumers learn about brands and form their preferences. This process can produce a preference structure that favors the pioneer, making it difficult for later entrants to “compete away” the pioneer's large market share, even if brands can reposition and switching costs are minimal.

The impact of low-price brands on the order of entry advantage

“…Lastly, Carpenter and Nakamoto (1989) suggest that consumers use the pioneer brand as a benchmark and because a low-price brand is a bioequivalent product with a lower price, it will provide a superior combination of price and quality to the pioneer, which will switch the value-orientated segment of consumers (Garretson et al, 2002).…”

“…However, it is not only the product attributes that help pioneers secure consumer preferences. Consumers also have more favourable attitudes towards pioneer brands, as well as a higher pioneer image/selfimage congruency (Alpert & Kamins, 1995;Carpenter & Nakamoto, 1989;Kardes & Kalyanaram, 1992). These advantages in perceived product attribute benefits and brand attitudes will increase consumer preferences towards the pioneer brand, and provides a standard to which later entrants will be compared (Carpenter & Nakamoto, 1989).…”

Consumers’ Perception and Misperception of Market Leadership and Market Pioneership

“…Pioneer status could be a factor in determining brand choice for two important reasons. First, the research of Carpenter and Nakamoto (1989) indicates that pioneership is important because it is the individual's first experience with the product. The pioneer configuration frames a subject's perceptions of the product category and becomes the category prototype.…”

“…We call the former "brand level" characteristics and the latter "category level" characteristics. Two commonly used category level extrinsic characteristics in the business world are market leadership and pioneership (Carpenter and Nakamoto, 1989). That is, a product category typically has a "market leader," the brand that has the largest sales, and a "pioneer," the brand that originated the category.2…”

“…These cues may be sufficient to sway the decision when objective differentiation is not readily available. The research of Hoch and Ha (1986) and Carpenter and Nakamoto (1989) suggests that this is particularly so under conditions in which product-level attributes are ambiguous or subjective in nature. For such situations, it was found that a simple heuristic (an example of which is market leadership or pioneership status) plays an important role in product evaluation.…”