The role of seeding in multi-market entry

Barak Libai, Eitan Muller, Renana Peres

Research output: Contribution to journalArticlepeer-review

Abstract

Firms introducing new products into multi-markets often face the dilemma of how to dynamically allocate their marketing resources during penetration. The aim of this study is to examine which responsive allocation strategy is more effective for these firms. We explore three major resource allocation strategies: Uniform strategy, in which the firm distributes the marketing efforts evenly among its regions regardless of market development; support-the-strong strategy, under which the firm invests its efforts proportional to the number of adopters in that region (at least up to a certain market coverage); and support-the-weak strategy, in which the firm invests its efforts proportional to the remaining market potential. Using both formal analy sis and complex systems simulations, we find that strategies that disperse marketing efforts, such as support-the-weak and uniform strategies, are generally superior to support-the-strong strategy. Not only is this finding surprisingly robust to market conditions and variations on these strategies, but it also runs counter to conventional wisdom prevailing in international marketing. The conditions under which support-the-strong policy might become more effective include: (a) fixed entry or operation costs above a certain level; and (b) substantial variance between regions in responsiveness to marketing efforts. However, variance in intrinsic innovativeness between regions does not imply the superiority of support-the-strong strategy.

Original languageEnglish
Pages (from-to)375-393
Number of pages19
JournalInternational Journal of Research in Marketing
Volume22
Issue number4
DOIs
StatePublished - Dec 2005

Keywords

  • Advertising
  • Complex systems
  • Diffusion
  • International marketing
  • Multi-market entry

Fingerprint

Dive into the research topics of 'The role of seeding in multi-market entry'. Together they form a unique fingerprint.

Cite this