Why buy second‐best? The behavioral dynamics of market leadership

Abstract

Purpose -In most markets it is possible to identify a brand leader and a number of brand followers. The purpose of this paper is to address the following question: "Why should any consumer purchase a 'second-best' option?" Design/methodology/approach -Consideration of the way in which these two groups of consumers (brand leaders and followers) trade off product attributes (utilitarian benefits, hedonistic benefits and price fairness) during the choice process is made in the study by path analysis of the appropriate structural equation models and then a consideration of the level and the differences between the means of the three variables. Findings -The paper finds that utilitarian attributes are of paramount importance to satisfaction with the brand. This is not in accordance with conventional wisdom, which leads us to believe that price is most important to buyers of second-tier brands and hedonic considerations most important to buyers of leading brands.Research limitations/implications -The model fit attained is only good enough for exploratory work (GFI ¼ 0:88=0:90) so replication with a larger sample would be appropriate. In addition, the research is carried out in South Korea -although we know of no reason why this should affect the results it would be of interest to generalize the results to a western economy. Nevertheless, the method of first fitting the model then trading off the attribute levels is unusual and quite interesting. Practical implications -Marketers of leading brands should not concern themselves about price but merely stress the benefits, whereas marketers of follower brands should make much of the price differential. Originality/value -The importance of utilitarian benefits have hitherto not often been stressed when marketing premium brands -this research suggests that this is wrong.

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“…In a recent study, these perceptions were extended to mixed-motive uses that involved both strong utilitarian and strong hedonic motivations 14 [50]. The findings of this study coincide with research findings that suggested that two customer perceptions, utilitarian and hedonic, influenced customers' purchase behaviour [67].…”

Different Effects of Utilitarian and Hedonic Benefits of Retail Food Packaging on Perceived Product Quality and Purchase Intention

“…Studies have conceptualized different types of consumer benefits as utilitarian or hedonic (Na et al, 2007). A study by Anselmsson et al (2007) found that brand differences included utilitarian benefits as well as hedonic benefits.…”

“…Utilitarian benefits are relatively tangible and relate to efficiency, utility, and economy. Utilitarian benefits relate to benefits associated with product possession, similar to the economic person theory (Chen et al, 2005) and the perception of offering a product to meet customers' functional needs (Na et al, 2007). For instance, the foremost utility of food is maintaining sufficient energy and nutrients to retain life.…”

The Effect of Product Type on Consumer Preferences for Website Content Elements: An Empirical Study

“…In the last stage of decision‐making, price often plays an important role in the final choice of one particular product or bundle of attributes from the set of options; this is particularly true for utilitarian products, where price‐performance trade‐offs are easier than for hedonic goods (Chaudhuri and Ligas, 2006; Na et al, 2007). Consequently, special offers, discounts and sales are valued more (cf.…”

“…Therefore price-performance trade-offs are difficult and it is complicated to establish a right price. Price is a more significant issue for utilitarian products (Na, Son and Marshall, 2007) than for hedonic products (Chaudhuri and Ligas, 2006), and this extends to promotions. Monetary promotions are more important for utilitarian products and nonmonetary promotions are more important for hedonic products, particularly for high-equity brands (Chandon, Wansink, and Laurent, 2000).…”