Big splash, no waves? Cognitive mechanisms driving incumbent firms' responses to low-price market entry strategies

摘要

Research Summary: Low-price market entries, aiming for rapid sales growth, tend to prompt strong competitive reactions. This research explores whether and how firms using low-price entry strategies can mitigate retaliatory incumbent reactions. An experiment with 656 managers shows that entrants can attenuate the strength of incumbents' responses by fostering perceptions of high aggressiveness or low commitment. Entrants may be able to accomplish this by adjusting their entry strategy to embed (subtle) cues of aggressiveness and (lack of) commitment. A replication experiment with university students reinforces our overall theoretical argument. However, the results also indicate that the interpretation of cues embedded in the entry strategy may be affected by the experience of incumbent firm managers. Overall, these results clarify the cognitive foundations of competitive responses to market entry.