Incumbent Defense Strategies Against New Product Entry
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competitive response
innovative entry
reaction speed
Management Sciences and Quantitative Methods
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Abstract
The objective of this study is to estimate the effectiveness of different defense strategies when faced with a new product introduction by a competitor. Using a sample of in cumbentsacross a wide range of industries, we find that faster reactions to the new entrant have a positive impact on the perceived success of the defense strategy. However, the greater the breadth of reaction (number of marketing mix instruments used), the less successful is the defense. The ability of an incumbent to maintain its market position is also significantly affected by industry characteristics and the degree of competitive threat posed by the new product entry.