The Impact of Regulation on Strategic Positioning: Self-Regulation in the RTE Cereal Industry

43 Pages Posted: 5 Aug 2019

See all articles by Young Hou

Young Hou

Harvard University - Business School (HBS)

Dennis Yao

Harvard University - Business School (HBS); University of Pennsylvania - Business & Public Policy Department

Date Written: August 2, 2019

Abstract

In this paper we exploit a natural experiment resulting from self-regulation adopted in the ready-to-eat (RTE) breakfast cereal industry. This event induced product repositioning which compressed the relevant product space and increased competition. Through this lens, we assess specific performance impacts associated with the regulation and develop links between product positioning and product brand equity resources. The latter results provide dynamic connections between positioning choices and the value of resources as determined by consumer demand and market competition. As a group, products constrained by regulation perform relatively poorer than unconstrained products, though unconstrained products are also negatively affected by the increased competition caused by the regulation-induced compression. Among other results, we also find that higher brand equity is not always relatively more valuable than lower brand equity when products are forced to reposition.

Keywords: self-regulation, positioning, resources, competitive dynamics, non-market strategy

Suggested Citation

Hou, Young and Yao, Dennis, The Impact of Regulation on Strategic Positioning: Self-Regulation in the RTE Cereal Industry (August 2, 2019). Harvard Business School Strategy Unit Working Paper No. 20-014. Available at SSRN: https://ssrn.com/abstract=3431311 or http://dx.doi.org/10.2139/ssrn.3431311

Young Hou

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Dennis Yao (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

University of Pennsylvania - Business & Public Policy Department ( email )

3641 Locust Walk
Philadelphia, PA 19104-6372
United States
215-898-3019 (Phone)

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