Consumer Preference Formation and Pioneering Advantage

Abstract

Market pioneers outsell later entrants in both consumer and industrial markets. Entry barriers arising from preemptive positioning and switching costs have been advanced to explain this market share difference, termed “pioneering advantage.” However, empirical studies show that pioneering advantages are present even in mature markets in which brands reposition and switching costs are minimal. In these cases, the authors argue that pioneering advantage can arise from the process by which consumers learn about brands and form their preferences. This process can produce a preference structure that favors the pioneer, making it difficult for later entrants to “compete away” the pioneer's large market share, even if brands can reposition and switching costs are minimal.