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Article
Publication date: 6 August 2019

David Kim Hin Ho, Eddie C.M. Hui, Tai Wing Ho and Satyanarain Rengarajan

This paper aims to examine the behavior of “rational” residential developers, under game theory, for their pricing strategy in a competitive environment.

Abstract

Purpose

This paper aims to examine the behavior of “rational” residential developers, under game theory, for their pricing strategy in a competitive environment.

Design/methodology/approach

Results show that residential developers cooperate implicitly for long-term benefit, leading to a slow-down in sales. Developers are motivated to deviate from cooperating at the beginning and at the end of successive periods in a sub-market. Relatively high profits, earnable in the first few periods, provide an allowance to undercut prices and improve sales. For the last few periods, the punishment for any deviation from cooperating is insignificant or zero. Note that the first-mover advantage in a new market is evident. On the effect of uncertainty on the developer’s residential prices, results show that as uncertainty increases, prices decrease while price variability increases.

Research limitations/implications

This study highlights the merits of a uniquely simplified experimental research design for the strategic behavioral pricing of the private residential development market using a game theoretic approach.

Practical implications

This study enhances the understanding of the residential development strategy of developers in the residential development market.

Originality/value

There is limited research on pricing strategy for the private residential development market in Asia.

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Article
Publication date: 1 December 2020

Frank Tian Xie, Naveen Donthu and Wesley J. Johnston

This paper aims to present a new framework that describes the relationship among market entry order and timing, the advantages accruing to first-movers and late-movers…

Abstract

Purpose

This paper aims to present a new framework that describes the relationship among market entry order and timing, the advantages accruing to first-movers and late-movers, entry timing premium (ETP), marketing strategy and enduring market performance of the firms. The framework, empirically tested using data from 241 business executives, expands extant research into new territory beyond first- and late-mover advantages in an attempt to reconcile a few streams of research in the area and provides an entry related, strategic assessment tool (ETP) for the managers. Contribution to marketing strategy theory and managerial implications are also presented.

Design/methodology/approach

Participants included informants in a firm’s strategic business unit who were the most familiar with a new product’s commercial launch, market condition at launch, competitor offerings, marketing activities and capabilities and eventual integration into or withdrawal from the product’s portfolio. Therefore, for the survey, the study targeted chief executive officers, vice presidents of marketing or sales, product or sales managers, general managers and regional managers. Both preference bias (Narus, 1984) and survivor biases among the respondents were addressed.

Findings

The research result of this study reveals two very significant aspects of marketing and marketing strategies. First, the importance of financial, pricing and cost strategies further attests to the fiercely competitive nature of the global market today and the tendency for firms to commoditize most products and services. An effective financial and pricing strategy, coupled with a higher level of ETP, is capable of leading a firm to initial market success in the product-market in which it competes. Both ETP (a positional advantage and resource of the firm) and financial and pricing strategies (a deliberate strategic decision of the management) are important to achieve this goal.

Research limitations/implications

This study is limited in several ways. The effects of entry order and timing on market performance could be dependent on the types of industries and types of product categories involved. However, as the hypotheses were well supported, the “industry specific” factors would provide “fine-tuning” in the future study. Second, the nature of the product (goods or services) may also present varying effects on the relationship studied (for differences between manufacturing and service firms in pioneering advantages, see Song et al., 1999). Services’ intangible nature, difficulty in protecting property rights, high involvement of boundary-spanning employees and customers, high reliance on delivery and quality, and ease of imitation may alter the proposed relationships in the model and the moderating effects. Third, although this study used a “retrospective” protocol approach in the data collection by encouraging respondents to recall market, product and business information, this study is not longitudinal. Lack of longitudinal data in any study involving strategic planning, strategy execution and the long-term effects is no doubt a weakness. In addition, due to peculiarity and complexity with regard to regulation and other aspects in pharmaceutical and other industries, the theory might be limited to a certain extent.

Practical implications

In all, the integrated framework contributes to the understanding of the intricate issues surrounding first-mover advantage, late-mover advantage, entry order and timing and the role of marketing strategy. The framework provides practitioners guidance as to when to enter a product-market to gain advantageous positions and how to maintain that advantage. Firms that use a deliberate late-mover strategy could also benefit from the research finding in mapping out their strategic courses of action.

Originality/value

This study believes that the halo effect surrounding first-mover advantage may have obscured the visions of some researchers and managers, and the pursuit of a silver bullet has led to frenzied interests in becoming a “first-mover” or a deliberate “late-mover”. The theoretical framework, which is substantiated by empirical testing, invalidates the long-held claim that entry of a particular kind (first-movers or late-movers) yields any unique competitive advantage. It is a firms’ careful selection of marketing strategies and careful execution of the strategies through effective operational tactics that would lead to enduring competitive advantage, under an adequate level of ETP.

Details

Journal of Business & Industrial Marketing, vol. 36 no. 7
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 28 September 2012

Thomas Cleff and Klaus Rennings

In environmental policy first mover advantages for environmental technologies are often taken for granted. It is a popular view to see the state as a political…

Abstract

Purpose

In environmental policy first mover advantages for environmental technologies are often taken for granted. It is a popular view to see the state as a political entrepreneur who introduces a certain environmental policy instrument and thus becomes the world market leader or the lead market for the respective technology. Against this background, the purpose of this paper is to find out if the idea of first mover and lead market advantages can be justified by theories and empirical evidence.

Design/methodology/approach

A wide range of theoretical and empirical papers from the business management and industrial economics literature were reviewed to provide success factors for different timing‐to‐market and lead market strategies of environmental innovations.

Findings

A successful innovator is not necessarily the first but very often one of the early movers within the competition of different innovation designs. The paper shows that the success of a timing strategy depends on country‐specific lead market potentials, on market and technology characteristics and on the regime of the country‐specific regulation. On this basis the paper derives options for environmental innovation strategies for firms under different circumstances of markets, technologies and regulations.

Research limitations/implications

Patent applications, R&D expenditure, etc. are not unimportant input factors for the innovation, but all these supply‐side factors are beyond the focus of this article.

Practical implications

Research on the lead market and the timing to market takes centre stage when product innovations are in the development phase. Companies in countries that do not have sufficient above‐average lead market attributes must target product innovations to fit the preferences of users in the lead market.

Originality/value

This paper is the first to analyse if different timing to market advantages and lead market advantages for environmental innovation can be justified by theories and by empirical evidence.

Details

European Journal of Innovation Management, vol. 15 no. 4
Type: Research Article
ISSN: 1460-1060

Keywords

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Article
Publication date: 1 January 1985

Michael E. Porter

Technological innovations can have Important strategic implications for individual companies and can greatly influence industries as a whole. Yet, not all technological…

Abstract

Technological innovations can have Important strategic implications for individual companies and can greatly influence industries as a whole. Yet, not all technological change is strategically beneficial. This article focuses on ways to recognize and exploit the competitive significance of change.

Details

Journal of Business Strategy, vol. 5 no. 3
Type: Research Article
ISSN: 0275-6668

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Article
Publication date: 1 December 1997

Cheryl Nakata and K. Sivakumar

Reports that, with sluggish growth in the developed markets of the world and increasing globalization, companies are turning to newly emerging markets for business…

Abstract

Reports that, with sluggish growth in the developed markets of the world and increasing globalization, companies are turning to newly emerging markets for business expansion. Therefore, understanding entry strategies in emerging markets is likely to become an increasingly important issue for academic researchers and marketing practitioners. First movers are generally thought to garner fairly robust advantages over later entrants; however, the degree to which these advantages prevail in emerging markets is not known. Examines, by means of a literature review, the effects of emerging market conditions on first mover advantages. Advances several research propositions, based on the findings, presents a conceptual model, and identifies directions for further research.

Details

International Marketing Review, vol. 14 no. 6
Type: Research Article
ISSN: 0265-1335

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Article
Publication date: 27 May 2014

Yu Yu and Sachin Gupta

The purpose of this paper is to take a close look at competition among the generic entrants during the first three years after patent expiration and examine whether there…

Abstract

Purpose

The purpose of this paper is to take a close look at competition among the generic entrants during the first three years after patent expiration and examine whether there is a first mover advantage. Pharmaceutical markets experience the entry of numerous generic firms upon expiration of the brand firm’s patent.

Design/methodology/approach

A random effect nested logit model of competition that allows for competition between the brand drug and generics, and among multiple generic drugs is specified. The model accommodates the effects of prices, detailing, sampling, journal advertising, time-in-market and molecule-specific characteristics. The model is estimated on cross-section time-series data for 49 molecules in which the brand drug lost patent exclusivity between 1992 and 2000.

Findings

Strong evidence that the early generic entrant enjoys a substantial market share and profit advantage over the second and the third entrants, after controlling for differences in marketing activities was found. In addition, evidence suggesting that the advantage is due to the response of the retail pharmacy channel and due to differential effectiveness of advertising and pricing between earlier versus later entrants was found.

Originality/value

This paper is the first to empirically model first mover advantage among undifferentiated products. The findings are useful for regulators in pharmaceutical and healthcare industries. They can also shed light on other industries where there is little or no quality differentiation, such as commodity trading, open-source software distribution and online banking.

Details

International Journal of Pharmaceutical and Healthcare Marketing, vol. 8 no. 2
Type: Research Article
ISSN: 1750-6123

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Article
Publication date: 3 November 2020

Johanna Kirjavainen, Saku J. Mäkinen and Ozgur Dedehayir

In addition to pioneering, empirical work on entry order increasingly addresses fast followers and laggards and the potential advantages they are able to capture. There is…

Abstract

Purpose

In addition to pioneering, empirical work on entry order increasingly addresses fast followers and laggards and the potential advantages they are able to capture. There is also a growing consensus in the academia, that current measures of firm performance used in the entry order literature to study these advantages are inadequate. This study analyzes the relationship between entry order and customer evaluations, which, depicting the performance of the firm's products in the market, are used as a proxy for firm performance.

Design/methodology/approach

The study is set in the digital camera industry, analyzing entries into each new technology level, in terms of the sensor resolution of compact and bridge cameras. The complete dataset consisted of 1,816 digital camera models introduced between January 1996 and December 2017. The data are analyzed using hierarchical multiple linear regression.

Findings

The study finds evidence of early-mover advantage for the compact product category. In the compact camera consumer market, both first-movers and fast followers outperform late movers. Furthermore, the difference in performance in comparison to laggards is greater for first-movers than for fast followers. However, in the bridge category which consists of a more heterogeneous set of products, no significant entry-order effects are detected.

Originality/value

The results clearly indicate that there exists an early mover advantage. Furthermore, the results are not consistent across different product categories within an industry; hence, caution needs to be exercised when analyzing industry dynamics and entry order effects. Finally, our novel conceptualization of firm performance measured as online customer evaluation add new opportunities to investigate firm success

Details

European Journal of Innovation Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1460-1060

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Article
Publication date: 1 August 2004

S. Chan Choi and Sharan Jagpal

Most pricing studies assume that firms have complete information about demand. In practice, managers must make decisions, given incomplete information about the demand for…

Abstract

Most pricing studies assume that firms have complete information about demand. In practice, managers must make decisions, given incomplete information about the demand for their own products as well as those of their rivals. This paper develops a duopoly pricing model in which firms market differentiated products in a world of uncertainty. Results show that the predictions of standard strategic pricing models may not hold when firms face parameter uncertainty and are risk‐averse. Under well‐defined conditions, there may be a “first‐mover” disadvantage to the firm that attempts to be the Stackelberg price leader in the market, especially in a market where demand is highly uncertain. Interestingly, if parameter uncertainty is sufficiently high, it may even be necessary for the price leader to share market information with its rival. When firms are risk‐averse, uncertainty generally decreases equilibrium prices and the variabilities of profits.

Details

Journal of Product & Brand Management, vol. 13 no. 5
Type: Research Article
ISSN: 1061-0421

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Article
Publication date: 1 September 2000

Kamel Mellahi and Michael Johnson

Using Amazon.com as a case study, the present research explores first mover (dis)advantages in e.commerce. It examines whether or not Amzon.com has sustained early mover…

Abstract

Using Amazon.com as a case study, the present research explores first mover (dis)advantages in e.commerce. It examines whether or not Amzon.com has sustained early mover advantages. What are these advantages? And how has Amazon.com reacted to late movers? Evidence generated from the case study suggests that the maintainability of first mover advantages in e.commerce depends on three main factors: continuous innovation, speed of implementation and patenting.

Details

Management Decision, vol. 38 no. 7
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 29 July 2014

Bradley J. Koch

– The purpose of this paper is to analyze the first-mover decision as one decision of a set of strategic decisions that ultimately determine performance.

Abstract

Purpose

The purpose of this paper is to analyze the first-mover decision as one decision of a set of strategic decisions that ultimately determine performance.

Design/methodology/approach

The author used survey data collected from foreign-invested firms in Sichuan, China, to test for evidence that first-movers perform better than late-movers.

Findings

The results reveal that there is a first-mover advantage when the other strategic variables are not included in the model. When the entire set of strategic variables is included, however, the first mover variable loses its significance and the willingness of the foreign partner to commit additional resources becomes the best predictor of performance. Consequently, it was argued that foreign investment strategies should be analyzed as a set of strategic decisions managers make to formulate the best mix.

Originality/value

The empirical evidence for the first-mover advantage may not be as well grounded as many have thought. When the first-mover strategic decision is analyzed in isolation from other strategic variables, which is commonly done in many empirical studies, it indicates that firms that enter China before their competitors perform better. Unfortunately, it is more logical to assume that managers dynamically develop a set of strategic decisions that ultimately determine the firm’s performance. To extrapolate one static decision from the strategic decision set and make broad assertions about its effect of performance is an over-simplification of the strategic decision process.

Details

Journal of Asia Business Studies, vol. 8 no. 3
Type: Research Article
ISSN: 1558-7894

Keywords

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