Sources of Market Pioneer Advantages in Consumer Goods Industries

In a broad cross section of consumer goods businesses, market pioneers generally have substantially higher market shares than late entrants. In fact, the empirical association between order of entry and market share is almost as strong as the association between market share and return on investment. The authors examine theoretical sources behind this relationship. The empirical results suggest that the higher pioneer shares are derived from firm-based superiority as well as from consumer information advantages. Nine hypotheses are developed and tested empirically. The results also indicate that order of market entry is a major determinant of market share.