Perception Spillovers Across Competing Brands: A Disaggregate Model of How and When

Drawing on the accessibility-diagnosticity framework and previous literature on branding and order of entry, the authors hypothesize that perception spillovers can also occur across directly competing products that do not share a common brand name. The authors suggest two mechanisms (prior perception spillover and dynamic perception spillover) and one moderating variable (product/brand similarity). To test for spillovers across competing brands, the authors develop a structural Bayesian learning model and estimate it using prescription choice and marketing communication data from a panel of physicians. From their model results, the authors find evidence of prior and dynamic perception spillovers across competing brands only when brands are sufficiently similar. In contrast, they find no evidence of spillover effects across brands that are highly dissimilar. Finally, several policy experiments illustrate the strength and significance of competitive spillovers for product diffusion, and from the results, the authors derive strategic implications for order-of-entry effects and the entry of me-too products.