New entrants in a mature market: An empirical study of the detergent market

Abstract

An analysis of the UK and German detergent markets provides useful evidence for the development of a model to predict the share changes that occur when a new product enters the market. A simple share order effect (SOE) model based on Luce's Axiom of the Independence of Irrelevant Alternatives (IIA) is tested on four different new product launches. Of these, only the product with both a new brand name and a new product format is consistent with the model. In the remaining three cases, all line extensions, the empirical data deviate from the model's predictions. The two UK line extensions appear to be affected by product format; the German line extension cannibalizes the parent. From these studies, it is suggested that radical line extensions do not cannibalize whereas line extensions that have a close fit with the parent are more likely to take sales from the core brand.

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