Resource title

Pioneering advantage and product line breadth: do demand, cost and profitability effects differ across consumer and industrial goods?

Resource image

image for OpenScout resource :: Pioneering advantage and product line breadth: do demand, cost and profitability effects differ across consumer and industrial goods?

Resource description

The order of entry literature suggests that pioneers should enter a market with a broad product line to preempt later entrants. In particular, empirical evidence indicates that a product proliferation strategy improves the pioneering market share advantage. The authors extend this analysis to examine effects of product line breadth on costs and overall profits for pioneering firms. Using PIMS data and an estimation method that controls for various unobserved effects, we find that a broader product line leads to a sustained pioneering profit advantage - but only for consumer goods. For industrial goods, in contrast, they find that in the long-run, the market share pioneering advantage is more than offset by an average cost disadvantage, and therefore a broader product line leads to a pioneering profit disadvantage.

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://flora.insead.edu/fichiersti_wp/inseadwp2005/2005-06.pdf

Resource license

Copyright INSEAD. All rights reserved