Determinants of Competitor Response Time to a New Product Introduction

Abstract

This research studies a neglected dimension of competitive defensive strategy—the speed of a competitor's reaction to the introduction of a new product. Building on the literature in organizational and strategic management, the authors investigate how the strategic pressures facing a firm and its organizational characteristics influence the speed with which it is willing and able to respond. A model that considers the ordered nature of the dependent measure is specified and estimated using PIMS data on industrial and consumer product manufacturers. Market growth, the market share of the reacting firm, the typical new product development time and the frequency of product changes in the industry, and the market share of the threatening firm appear to be significant determinants of reaction time.

Marketing and business performance

“…Response While there is some evidence that "no response" by competitors is a common reaction to a firm's marketing strategy moves (e.g., Leeflang and Wittink 1996), there is also evidence that when and how rivals respond can be explained by a number of different factors including rival characteristics, marketing strategy change characteristics, and focal firm characteristics (e.g., Bowman and Gatignon 1995;Chen et al 1992). RBV theory posits that if one or more rivals respond to a firm's marketing strategy moves in ways that either imitate them or deliver an equivalent value proposition, this will reduce the firm's ability to achieve or sustain a positional advantage via its marketing strategy implementation and may also diminish the performance value of any positional advantage achieved (Barney 1991;Conner 1991;Dierickx and Cool 1989).…”

Technological capability, social capital and the launch strategy for innovative products

“…Although still inclusive, the relationship between market growth and firm performance has been recognized, and many studies have supported that market growth exerts great influence on strategy decisions (Fogg, 1974;Gatignon, Weitz, & Bansal, 1990;Harrigan, 1981;Robinson & Fornell, 1985). Additionally, market competitiveness is another widely accepted characteristic that gains systematic attention (Bowman & Gatignon, 1995;Gatignon et al, 1990;Green, Barclay, & Ryans, 1995;Guitinan, 1999;Hultink & Robben, 1999;Lambkin, 1992;Yoon & Lilien, 1985). The features of competitiveness, including different perspectives of the market, are not only crucial factors relevant to the triumph of a new product's launch strategy, but also serve as key variables in operationalizing the variable of market competitiveness in this study.…”

“…The number of competitors Bowman and Gatignon (1995), Choffray and Lilien (1984), Gatignon et al (1990), Green et al (1995), Guitinan (1999), Lambkin (1992), Yoon and Lilien (1985) Industry concentration Bowman & Gatignon, 1995;Green & Ryans, 1990;Lambkin, 1992 Entry barriers Gatignon et al (1990), Hultink and Langerak (2002), Hultink and Robben (1999); Shankar (1999) Competitive reactions from incumbents Gatignon et al (1990), Hultink and Robben (1999), Shankar (1999), Hultink and Langerak (2002) Appendix B. Technological capability and social capital commanded by Taiwan IC design firms…”

The race to dominate the mobile payments platform: Entry and expansion strategies

“…Followers respond either by trying to reduce lead times of the first-mover by entering the market soon after the pioneer (Bowman andGatignon 1995, Vakratsas et al 2003), or by delaying their market entry in order to optimize performance (Levesque and Shepherd 2004). The greater the perceived threat posed by the first mover, the faster the follower's response (Kuester et al 1999).…”