Hunted hunter: the role of competitive comparison in product survival

Abstract

This study proposes that competitive comparisons disseminated by rivals influence the market lifespan of a product. This paper bridges the following two fundamental aspects of strategy: product survival and competition analysis. Utilizing a framework that examines rivalry from two perspectives—organizations and products—we build on the awareness–motivation–capability theoretical approach to explore in detail the impact of competition on the commercial longevity of firms’ products. Our first hypothesis posits that when a rival competitively compares its product with the product of the focal firm, the latter firm is more likely to counterattack by carrying out competitive actions. The second one assumes that the survival of a focal firm’s product increases when another company compares the product of the focal firm with any of the products that are part of its portfolio. We employ a longitudinal database capturing dyadic competitive comparisons between automakers’ vehicles in the Spanish car market from 2008 and 2017. This market context is important because Spain was the eighth largest automobile producer worldwide (and the fifth one in Europe) and ranked twelfth in the worldwide ranking of countries (and the fifth one in Europe) with the most units registered in 2017. Consistent with our hypotheses, our analysis reveals the following: (i) competitive comparisons by a rival with a focal firm’s product led to increased subsequent actions by the focal firm, specifically in terms of pricing and advertising investments; and (ii) a focal company’s product remains in the market longer when it is identified as a comparison target by another organization.