The Effect of a New Brand Entrant on a Market

Malcolm Wright and Anne Sharp (2001), Journal of Empirical Generalisations in Marketing Science, Vol.6, 2001, p.15-29.


Abstract

Through examining the impact of a new packaged goods brand on key market and brand performance measures, we contribute to the growing body of knowledge concerning new brand behaviour. Using 20 weeks worth of panel data, we evaluated the impact of a new brand launch on a beverages market, looking at how it performed in terms of gaining buyers and the rate at which they purchased. We also examined how the competitor parameters of the market were affected by the new entrant.

Our findings suggest that new brands look just like established brands within the short term. They also show that normal patterns of double jeopardy, where bigger brands not only have more customers but these customers also purchase slightly more often, are largely unaffected in a launch for both the new brand and existing brands. Finally, it appears that there are no obvious effects on the normal patterns of competition, as expressed by the parameters of the Dirichlet model of repeat-purchase.

These are encouraging results. As suggested in concept by previous researchers (see
Ehrenberg 1991), the Dirichlet model is robust enough to be used in the proposed planning and monitoring role for a new brand launch.


These findings make an important contribution to the growing empirical generalizations concerning the behaviour of new brands and to our understanding of the robustness of the Dirichlet model.


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