The Influence Of Market Strategy On Performance: Which Strategy Type Leads To Superior Performance Under Which Circumstances?

3251 words - 14 pages

In theoretical and empirical literature as well as in practice both market pioneering and later entrant strategy are outlined to lead to superior product performance. This literature review analyzes which strategy leads to superior product performance under which circumstances. Therefore, a conceptual framework is developed which illustrates the complex relationships of the integrated parameters. A detailed literature review is conducted to analyze theoretical as well as empirical approaches of strategy superiority. A holistic framework is introduced which depicts the superiority of a market strategy under given circumstances. Results suggest that being a pioneer or later entrant ...view middle of the document...

However, in the literature the first mover is often positive related to success factors like market share. Thus, it remains unclear which variables influence the performance of a new product. Therefore the literature review at hand examines which strategy type is superior under which circumstances. Specifically, the aim of this literature review is to answer the following question: Is the pioneer strategy superior for new product performance?

The paper at hands depicts a conceptual framework explaining the different market strategies, the market and environmental conditions affecting new product performance, the deployment of internal resources as well as the performance measurement. Thereafter the literature is reviewed to outline the theoretical and empirical explanations for the superiority of a market strategy. Lastly, a framework is introduced which holistically analysis the superiority of the market timing strategy.
2. Conceptual Framework
The existence of various market strategies is outlined in literature, each affecting the company’s success differently. A brief description of market strategies gives an overview about the company’s possibilities to enter the market (Figure 1). Further, market characteristics and internal resources are depicted and their impact on the successful implementation of strategies is explained. To account for generalizability of results, the options to measure product performance are described.

Market strategies differ with regard to their categorization. Regarding the timing, four different strategies are established. Therefore, a first-to-market strategy appears to be especially promising with the existence of a strong R&D department, whereas a follow-the-leader strategy relies on the firm’s competency to react quickly to market changes. Application engineering is especially suitable when the market is already matured and companies can focus on niche products. Finally, Me-too strategies are applicable for companies who are able to operate efficiently and thus reduce its costs.

Miles et al. (1978) develop three strategies while focusing on the rate of product-market innovation. The authors describe the defender as only producing few products for a narrow market segment, thus rarely participating in product or market development. On the other hand, the prospector shows a high rate of product-market innovation, exploiting new product opportunities regularly. The analyzer is located between the defender and the prospector. Thus the analyzer strives to use opportunities while ensuring traditional products.

Cooper (1985) outlines that new product strategies are differently adopted by firms and thus identifies five new product strategy scenarios: Technologically driven, balanced-focused, technologically deficient, low budget conservative as well as high budget diverse strategy.

The literature review at hand focusses solely on the aspect of the timing of market entry as this definition is...

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