Pushed into a crowd: Repositioning costs, resources, and competition in the RTE cereal industry

Abstract

Research summary This article exploits a natural experiment involving self‐regulation in the ready‐to‐eat (RTE) breakfast cereal industry to evaluate the performance impact of product repositioning. It then examines how a product's brand equity value declines with repositioning distance and explores various nonprice responses of firms to increased own and rival competition. Self‐regulation led to a crowding of the product space by forcing differentiated products to become more similar. We find that products constrained by regulation performed relatively worse than unconstrained products. Furthermore, brand equity specific to a product was tightly linked to existing product positions. Increased competition also led to increased brand equity investments and some products with strong brand equity repositioned more aggressively than those with weak brand equity. Managerial summary This article illustrates how firms respond to newly‐imposed regulatory constraints and how product brand equity is tightly linked to underlying product positions. The analysis is an empirical examination of a self‐regulatory initiative that placed advertising restrictions on high sugar RTE breakfast cereal products targeted toward children. We explore the impact of the regulation on performance and then use the setting to examine the connection between brand equity and changes in product positions. Finally, we examine firm responses to rival entry that include exiting, repositioning, and increasing investments in differentiation.

Competitive action-response strategies of mobile network operators in sub-Saharan Africa

“…Moreover, the nature of an attack influences the likelihood of rival responses (Hou and Yao, 2022;Kilduff et al, 2016). The potential impact of an attack on rivals' performances and the strategic importance of the attacked market are among the other issues considered by rivals before responding to a competitive action (Hsieh and Hyun, 2018;Li et al, 2010).…”

“…The potential impact of an attack on rivals' performances and the strategic importance of the attacked market are among the other issues considered by rivals before responding to a competitive action (Hsieh and Hyun, 2018;Li et al, 2010). Essentially, an attack that took less time and resources to plan and execute may trigger swift responses, especially if launching a response does not pose any major disruptions to the responder's competitive position (Hou and Yao, 2022). Such an attack may not create worry to rivals.…”

“…A competitive attack capable of sustaining competitive advantages and enhancing organizational performances minimizes rivals' incentives to respond and maximizes response lag (Hou and Yao, 2022). Such impactful and sustainable attacks should be stealthy, complex, and oblique (or indirect) (Kilduff et al, 2016).…”

Corporate Political Activity, Reimagined: Revisiting the Political Marketplace

“…Further, tactics such as dormancy (i.e., temporary reduction in firms' activity in response to detrimental public policy; Kozhikode, 2016), venue shifting (Georgallis, Pimentel, & Kondratenko, 2021;Ingram & Rao, 2004;Kozhikode, 2016;Somaya & McDaniel, 2012), self-regulation, and regulatory co-creation (Delmas & Montes-Sancho, 2010;Gao & McDonald, 2022;Hou & Yao, 2022;Werner, 2012) may not necessarily be classified as financial, informational, or constituency-building strategies. Although such tactics undoubtedly represent CPA in that they allow firms to influence their governmental outcomes, most of them do not require interaction with focal governmental actors (i.e., those that currently have jurisdiction over the firm, and therefore have the power to decide on its political outcomes), instead shifting the interaction to future governmental actors (e.g., dormancy), governmental actors in other jurisdictions (e.g., venue shifting), and even the firm itself (e.g., self-regulation and regulatory co-creation).…”

“…As another example, due to regulatory capture by incumbent firms, new entrants may seek out ways to disrupt the status quo by breaking regulations, rather than attempting to influence politicians (Paik et al, 2019). Additionally, as mentioned above, firms may also choose to abstain from political exchanges with focal political actors, engaging instead in venue-shifting (Georgallis et al, 2021;Ingram & Rao, 2004;Somaya & McDaniel, 2012), self-regulation (Hou & Yao, 2022;Werner, 2012), or even dormancy (Kozhikode, 2016). In other words, whether due to their inability or unwillingness, not all firms participate in all types of CPA.…”