Decision Ambiguity and Incumbent Brand Advantage

This article examines the role of decision ambiguity in judgments that consumers make about an incumbent (the brand a consumer currently uses) versus an attack brand (a new, superior competitor). It is hypothesized that decision ambiguity creates an advantage for the incumbent. A conceptualization of decision ambiguity is offered. In three experiments, factors that can cause decision ambiguity are manipulated and their effects on preference for the incumbent are investigated. The results underscore the role of decision ambiguity in incumbent brand advantage. In two other experiments, boundary conditions are examined. T his research focuses on the advantages of incumbency. The term incumbent refers to the brand that a consumer first chooses in a product category. A brand may achieve incumbent status by being the first brand chosen by consumers entering a mature product class or by being a pioneer in a new product class. An incumbency advantage occurs when consumers prefer the incumbent to an objectively superior but later-encountered competitor (referred to as the attack brand). The objectives of this research are to examine conditions under which an incumbent advantage obtains and to conduct an exploratory investigation of the psychological processes that underlie it. Research in marketing has not been specific about either the processes or the conditions that result in an incumbency advantage. Although research on the related topic of brand loyalty has emphasized the role of emotional commitment or ego involvement in repeat purchase behavior (e.g., Jacoby 197 1; Jacoby and Chestnut 1978), other psychological processes are surely operative. On the basis of behavioral decision theory research, I propose a framework that offers a different explanation for consumer repeat purchase behavior. In addition, this framework offers an explanation of the pioneering advantage that is consistent with, but independent of, prior research (e.g., Carpenter and Nakamoto 1989; Kardes and Kalyanaram 1992; Schmalensee 1982). With a few notable exceptions in the domain of the pioneering advantage (Carpenter and Nakamoto 1989; Kardes and Kalyanaram 1992; Kardes et al. 1993), research in marketing has not provided a psychological account of the incumbency advantage. However, behavioral decision theory research offers some suggestions. For example, Samuelson and Zeckhauser (1988) showed that people prefer a previously chosen option over others. This pervasive tendency labeled the "status quo bias" has been demonstrated across a range of decisions. Samuelson and Zeckhauser (1988) invoked a variety of psychological mechanisms to explain the phenomenon, including commitment induced by sunk costs, regret avoidance, cognitive misperception, and feeling of control. However, Samuelson and Zeckhauser (1988) were silent with respect to conditions that would make such biases present, absent, or even reversed (cf. Biehal and Chakravarti 1983). The present research identifies the decision characteristics that can increase or decrease the likelihood of the status quo bias. The central premise of this research is that the incumbency advantage will vary as a function of the level of ambiguity in the decision environment.