Early-Entrant Advantage, Word-of-Mouth Communication, Brand Similarity, and the Consumer Decision-Making Process

Abstract

To better understand the competitive dynamics between an early and a later entrant, in this study we examined the extent to which word of mouth (WOM) regarding the later entrant and the later entrant's similarity to the early entrant influences the consumer decision process. We hypothesized that the influence of WOM and similarity depends on the nature of the decision‐making task, which is theorized as either a stimuli‐based or memory‐based task. A 3‐stage, sequential‐logit model with 2 focal brands (the early and later entrants) was developed to test the influence of independent measures on the likelihood of (a) retrieval; (b) consideration, given retrieval; and (c) choice, given consideration for both the early entrant and the focal follower. Data from 2 experiments provides support for the multistage conceptualization of the consumer decision process and demonstrates that the effects of WOM communication and similarity depend on the nature of the decision‐making task.