A new brand’s behaviour in an established market

Date01 February 2003
Published date01 February 2003
Pages52-65
DOIhttps://doi.org/10.1108/10610420310463135
AuthorJanet Hoek,Zane Kearns,Kathryn Wilkinson
Subject MatterMarketing
A new brand's behaviour in an
established market
Janet Hoek
Associate Professor of Marketing, Massey University, Palmerston
North, New Zealand
Zane Kearns
Lecturer in Marketing, Massey University, Palmerston North,
New Zealand
Kathryn Wilkinson
Media Planner, Promotus Advertising, Wellington, New Zealand
Keywords Market entry, Market share, Brands, New product development
Abstract Although managers can use panel data to monitor their brands' performance in
fast-moving-consumer-goods categories, the regularities researchers have documented apply
to stationary and unpartitioned marketplaces. However, the introduction of a new brand may
alter the structure of a marketplace and thus the behaviour patterns consumers display. This
paper discusses the regularities typically observed in stable markets and considers these in
the context of a market that had just experienced a new brand launch. It is concluded that the
new brand behaved as an established brand very quickly and that the generalisations used to
benchmark existing brands provided accurate predictions of the new brand's performance.
Introduction
Over the last four decades, Ehrenberg and his colleagues have documented a
number of generalisations about brands' behaviour in stationary markets. For
example, they have identified double jeopardy (DJ) trends in numerous
markets and product categories, and across different types of consumer
behaviour (Ehrenberg et al., 1990). The observed DJ patterns mean that it is
perfectly normal for small brands to perform poorly relative to larger brands
on loyalty measures such as average repeat buying rates and proportion of
sole loyal buyers.
The well-known Dirichlet model of consumer behaviour has integrated a
number of other patterns in consumers' behaviour (Ehrenberg, 1988). Dirichlet
patterns enable managers to compare their brands' performance with market
norms and thus to evaluate whether the brands' repeat purchase rates, or
proportion of sole brand-loyal buyers, are above or below what would normally
be expected in that market. Managers' knowledge of DJ, when combined with
Dirichlet predictions, can assist them to estimate important benchmarks in
mature markets. These benchmarks can also be useful when they examine the
behaviour of new brands, in which they may have invested considerable R&D,
production and marketing resources.
How a new brand performs and how it affects the structure of the market it
enters are important questions that researchers have not yet addressed in full.
This paper begins by briefly reviewing two research streams:
The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/1061-0421.htm
The authors would like to acknowledge the generous support of A.C. Nielsen, who
supplied the data and, particularly, the assistance Rob Clark and Chris Morris,
current and former directors of the HomeScan Panel, have provided.
Double jeopardy
Repeat purchase rates
52 JOURNAL OF PRODUCT & BRAND MANAGEMENT, VOL. 12 NO. 1 2003, pp. 52-65, #MCB UP LIMITED, 1061-0421, DOI 10.1108/10610420310463135
An executive summary for
managers and executive
readers can be found at the
end of this article

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