Market latecomers must add relevant, unique value to beat pioneer brands

What is it that allows some brands to succeed and some to fail? Why is it sometimes better to be first and other times more advantageous to reach the market later? A study by researchers at the University of Washington Foster School of Business and the University of Miami takes a close look at the learning process consumers use to evaluate brands.

According to Marcus Cunha, Jr., an associate professor of marketing at the Foster School, consumers more easily associate multiple attributes to pioneer brands than to follower brands. They also tend to associate attributes common to both brands more to the first brand they encounter, and unique attributes with later arriving brands.

How last can be first…
In a series of studies, Cunha and co-author Juliano Laran of the University of Miami found that late entrants into a market need to do what the early leader does best, but also offer a distinctive attribute that consumers value more than the attribute shared by the pioneer or other late brands.

The researchers also found that, despite the influx of competition boasting new and improved functionality, pioneering brands should continue to focus on the common attribute when consumers value this shared common attribute—rather than continually adding new bells and whistles.

Cunha cites the battle between iPod versus Zune as a tidy example of the phenomenon. Apple’s iPod mobile digital music player came first, and seduced millions of consumers with its elegant graphical touchpad. Microsoft’s Zune reached the market later, offering a comparable interface plus the distinctive ability to easily share downloaded music with friends. But this innovation was not highly valued by consumers, and Zune struggled to gain market share against its rival.

…And how first can remain first
Apple continued to make the right moves, Cunha adds, by developing the iPhone rather than simply rolling out multiple generations of iPod. “Apple decided, wisely, not to bother chasing the later entrants on other features and instead focused on a new product with familiar functionality, effectively skipping a generation,” he says. “Zune focused correctly on distinctive features, but they were not valued enough by customers to offset the value of the common features which were more strongly associated with the iPod.”

“It’s not enough just to do something different,” Cunha adds. “It has to be an attribute that’s highly valued to overcome the value of the common features which will always be associated with the pioneer brand. Also, contrary to intuition, pioneer brands can defend their turf by communicating important attributes that other brands also offer instead of offering new features.”

The study, “Asymmetries in the Sequential Learning of Brand Associations: Implications for the Early Entrant Advantage,” is published in the February 2009 Journal of Consumer Research.