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Brand Capital and Incumbent Firms' Positions in Evolving Markets

Louis A. Thomas
The Review of Economics and Statistics
Vol. 77, No. 3 (Aug., 1995), pp. 522-534
Published by: The MIT Press
DOI: 10.2307/2109912
Stable URL: http://www.jstor.org/stable/2109912
Page Count: 13
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Brand Capital and Incumbent Firms' Positions in Evolving Markets
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Abstract

In many advertising-intensive industries one observes market share persistence, i.e., firms maintaining lead market shares over long periods of time. I hypothesize that firms that have the largest stock of well-established brands, a stock that I term brand capital, are most likely to introduce new products in response to new market information about consumer preferences. Firms with less brand capital delay their introductions until the uncertainty concerning the market size is reduced. I present empirical support in a study of new product introductions in the U.S. beverage industry.

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