Retaliatory Behavior to New Product Entry

Question 1

What is “Kuester, S., Homburg, C., & Robertson, T. S. (1999). Retaliatory Behavior to New Product Entry” about?

Answer 1

This article examines retaliatory behaviors exhibited by incumbent firms when a new product enters their market. The authors aim to:
1. Understand the dimensions of retaliation: speed, intensity, breadth, and instruments used.
2. Identify antecedents of retaliation: characteristics of the entrant, incumbent, and market.
3. Analyze empirical patterns of retaliation across industries to generalize strategic insights.
Key Objective: To provide a comprehensive framework for understanding how and why firms retaliate against new product entries.

Question 2

What is the conclusion of “Kuester, S., Homburg, C., & Robertson, T. S. (1999). Retaliatory Behavior to New Product Entry”?

Answer 2

Kuester, Homburg, and Robertson provide a comprehensive framework for understanding retaliation against new product entries. Their findings highlight the interplay of firm and market characteristics in shaping retaliation strategies and emphasize the importance of agility and multidimensional approaches in competitive defense.

Question 3

What is the theoretical contributions of “Kuester, S., Homburg, C., & Robertson, T. S. (1999). Retaliatory Behavior to New Product Entry”?

Answer 3

1. Multidimensional Framework:
   o Integrates instrumental, intensity, breadth, and speed dimensions of retaliation for a holistic understanding.
2. Dynamic Contexts:
   o Highlights the role of market and firm-specific factors in shaping retaliation strategies.
3. Empirical Validation:
   o Provides robust evidence for patterns of retaliation across industries, bridging gaps in prior theoretical models.

Question 4

What is the managerial implications of “Kuester, S., Homburg, C., & Robertson, T. S. (1999). Retaliatory Behavior to New Product Entry”?

Answer 4

1. Strategic Retaliation:
   o Firms must tailor their response based on the competitive context and resource availability.
   o Proactive monitoring of market dynamics can help incumbents anticipate threats and reduce response lag.
2. Balancing Speed and Intensity:
   o Rapid responses may not always be feasible for innovative product threats, necessitating long-term counterstrategies.
   o Resource allocation should prioritize instruments that maximize competitive impact.
3. Leveraging Market Characteristics:
   o In high-growth markets, focus on product innovation to defend market position.
   o In price-sensitive markets, use price retaliation judiciously to avoid profit erosion.
4. Avoiding Inertia:
   o Larger firms should address internal inflexibilities to remain competitive against agile entrants.

Question 5

What are the key findings in “Kuester, S., Homburg, C., & Robertson, T. S. (1999). Retaliatory Behavior to New Product Entry”?

Answer 5

A. Retaliation Patterns
1. Instrumental Choice:
o Product retaliation (e.g., new product launches, improvements) was most common (81.2%).
o Price retaliation occurred in 54.8% of cases, with 27.4% involving price cuts.
o Other instruments (distribution, promotion) were used less frequently.
2. Breadth and Combination:
o Most firms used 2–3 marketing mix elements simultaneously, showcasing multidimensional retaliation.
3. Speed of Reaction:
o Rapid responses were more common in high-growth markets and when the threat was immediate.
B. Drivers of Retaliation
1. Entrant Innovativeness:
o Highly innovative products triggered stronger product retaliation but delayed speed due to complexity.
2. Perceived Threat:
o Higher threat levels accelerated responses and intensified actions across multiple dimensions.
3. Market Growth:
o High-growth markets encouraged aggressive product retaliation to protect future profitability.
4. Industry Concentration:
o Less concentrated markets exhibited broader and faster retaliation, while concentrated markets relied on cooperative or selective responses.
5. Incumbent Size:
o Larger firms retaliated less strongly and more slowly, reflecting inertia and self-cannibalization risks.
C. Interdependencies Among Dimensions
1. Price retaliation was associated with faster reactions due to ease of implementation.
2. Breadth of retaliation increased with product retaliation but less so with price-based responses.

Question 6

What are the Antecedents of Retaliation?

Answer 6

1. Entrant Characteristics:
   o Innovativeness of the new product.
   o Perceived threat to the incumbent’s market share.
2. Incumbent Characteristics:
   o Firm size, exit costs, and resource flexibility.
3. Market Characteristics:
   o Growth rate, concentration, and price sensitivity.

Question 7

What are Retalitory Mechanisms?

Answer 7

• Firms can adopt preentry deterrence strategies (e.g., capacity expansion) or postentry defense mechanisms (e.g., price wars, new product launches).

Question 8

What are the Dimensions of Retaliation?

Answer 8

1. Instrumental Dimension:
   o Firms can retaliate using the same marketing mix instrument (reciprocal retaliation, e.g., product vs. product) or a different one (e.g., price cuts).
2. Intensity Dimension:
   o Refers to the degree of investment (e.g., scale of advertising or discount depth).
3. Breadth Dimension:
   o The number of marketing mix instruments used (e.g., combining product changes with promotions).
4. Speed Dimension:
   o Time taken to react after the competitive threat is observed.