In this paper, we use a spatial competition model developed by Pal (1998) to analyze producer imposed retail price ceilings and producer assigned exclusive geographic sales territories. Two wholesale distributors are presumed to each have a single collection point respectively from which they supply retail outlets at many locations. Each wholesaler chooses the quantity to ship to each outlet and the retail prices attain market clearing levels. Given that the costs of shipping depend on distance, this system results in waste in that the products are not shipped exclusively from the nearest collection point. As pointed out by Matsumura (2003) this wasteful cross-hauling can be prevented if the manufacturer assigns exclusive geographic territories to the distributors. But the costs of administering an exclusive territory system may well outweigh any savings in shipping costs. In this instance a manufacturer stipulated price ceiling may be the preferred alternative. By controlling not only the manufacturer price but also the retail price at each location, the manufacturer can deter wasteful cross-hauling and expand the overall channel profit, while also conferring enlarged consumer surplus.
{"title":"Vertical Control of Cournot Wholesalers in Spatial Competition: Exclusive Territories? Or Maximum Retail Price Stipulations?","authors":"Tatsuhiko Nariu, D. Flath","doi":"10.2202/1546-5616.1032","DOIUrl":"https://doi.org/10.2202/1546-5616.1032","url":null,"abstract":"In this paper, we use a spatial competition model developed by Pal (1998) to analyze producer imposed retail price ceilings and producer assigned exclusive geographic sales territories. Two wholesale distributors are presumed to each have a single collection point respectively from which they supply retail outlets at many locations. Each wholesaler chooses the quantity to ship to each outlet and the retail prices attain market clearing levels. Given that the costs of shipping depend on distance, this system results in waste in that the products are not shipped exclusively from the nearest collection point. As pointed out by Matsumura (2003) this wasteful cross-hauling can be prevented if the manufacturer assigns exclusive geographic territories to the distributors. But the costs of administering an exclusive territory system may well outweigh any savings in shipping costs. In this instance a manufacturer stipulated price ceiling may be the preferred alternative. By controlling not only the manufacturer price but also the retail price at each location, the manufacturer can deter wasteful cross-hauling and expand the overall channel profit, while also conferring enlarged consumer surplus.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2005-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1032","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68627000","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The concept of Integrated Marketing Communications (IMC) emphasizes the role of synergy, which arises when the combined effect of multiple activities exceeds the sum of their individual effects. In this paper, we investigate the effects of synergy on the profitability of IMC programs in uncertain markets. We develop a dynamic multimedia model that incorporates both synergy and uncertainty, and use it to determine the optimal IMC program. Our results generalize previous findings to uncertain markets, illuminate the profit implications of IMC programs, and explain the catalytic effects of synergy in IMC contexts. Specifically, we find that the expected long-term profit of the advertised brand increases as synergy increases. Furthermore, managers should allocate a non-zero budget to a catalytic activity even if it is completely ineffective. Finally, these findings continue to hold in an uncertain duopoly market.
{"title":"Long-term Profit Impact Of Integrated Marketing Communications Program","authors":"K. Raman, P. Naik","doi":"10.2202/1546-5616.1014","DOIUrl":"https://doi.org/10.2202/1546-5616.1014","url":null,"abstract":"The concept of Integrated Marketing Communications (IMC) emphasizes the role of synergy, which arises when the combined effect of multiple activities exceeds the sum of their individual effects. In this paper, we investigate the effects of synergy on the profitability of IMC programs in uncertain markets. We develop a dynamic multimedia model that incorporates both synergy and uncertainty, and use it to determine the optimal IMC program. Our results generalize previous findings to uncertain markets, illuminate the profit implications of IMC programs, and explain the catalytic effects of synergy in IMC contexts. Specifically, we find that the expected long-term profit of the advertised brand increases as synergy increases. Furthermore, managers should allocate a non-zero budget to a catalytic activity even if it is completely ineffective. Finally, these findings continue to hold in an uncertain duopoly market.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2004-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1014","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626459","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This short note introduces a new methodology for capturing and portraying the competitive structure of a market. Using the current Presidential contest as the context, the methodology first describes a simple and efficient data collection approach that generates the data necessary for applying Tverskys Elimination-By-Aspects Model (1972a, 1972b) at the market level. Then, relying on recently published mathematical results (Batsell, Polking, Cramer, and Miller, 2003) the method shows the complete decomposition of the competitive structure of a market based on the elimination model. Also introduced is a new way to graphically portray the competitive structure of a market in the form of a choice-based perceptual map, which has several desirable properties.
这篇短文介绍了一种捕捉和描绘市场竞争结构的新方法。以当前的总统竞选为背景，该方法首先描述了一种简单而有效的数据收集方法，该方法生成了在市场层面应用特沃斯基的按方面淘汰模型(1972a, 1972b)所需的数据。然后，依靠最近发表的数学结果(Batsell, Polking, Cramer, and Miller, 2003)，该方法显示了基于消除模型的市场竞争结构的完全分解。还介绍了一种以基于选择的感知图的形式图形化地描绘市场竞争结构的新方法，它具有几个理想的特性。
{"title":"A New Approach for Capturing and Potraying the Competitive Structure of a Market: An Application To The Bush-Kerry-Nader Presidential Contest","authors":"Richard R. Batsell","doi":"10.2202/1546-5616.1020","DOIUrl":"https://doi.org/10.2202/1546-5616.1020","url":null,"abstract":"This short note introduces a new methodology for capturing and portraying the competitive structure of a market. Using the current Presidential contest as the context, the methodology first describes a simple and efficient data collection approach that generates the data necessary for applying Tverskys Elimination-By-Aspects Model (1972a, 1972b) at the market level. Then, relying on recently published mathematical results (Batsell, Polking, Cramer, and Miller, 2003) the method shows the complete decomposition of the competitive structure of a market based on the elimination model. Also introduced is a new way to graphically portray the competitive structure of a market in the form of a choice-based perceptual map, which has several desirable properties.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2004-09-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1020","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626844","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Suppose that consumers incur fixed shopping costs and choose stores according to advertised discounts. Then, the extent to which a store will discount advertised items should increase with the profit from other regularly-priced items. Bookstores customarily advertise discounts on bestsellers. Among conventional bookstores, we found that the bestseller discount systematically increased with the store area, selection of titles, and presence of other product categories. One standard deviation increase in store area was associated with a 3.7 (± 1.8) higher bestseller percentage discount. Among online stores, we found that the bestseller discount systematically increased with the selection of titles and number of product categories. One standard deviation increase in selection was associated with a 9.5 (± 2.2) higher bestseller percentage discount. These results indirectly confirm that booksellers discount bestsellers to attract consumers, and that consumers bear significant fixed shopping costs.
{"title":"Buyer Shopping Costs and Retail Pricing: An Indirect Empirical Test","authors":"S. Lee, I. Png","doi":"10.2202/1546-5616.1017","DOIUrl":"https://doi.org/10.2202/1546-5616.1017","url":null,"abstract":"Suppose that consumers incur fixed shopping costs and choose stores according to advertised discounts. Then, the extent to which a store will discount advertised items should increase with the profit from other regularly-priced items. Bookstores customarily advertise discounts on bestsellers. Among conventional bookstores, we found that the bestseller discount systematically increased with the store area, selection of titles, and presence of other product categories. One standard deviation increase in store area was associated with a 3.7 (± 1.8) higher bestseller percentage discount. Among online stores, we found that the bestseller discount systematically increased with the selection of titles and number of product categories. One standard deviation increase in selection was associated with a 9.5 (± 2.2) higher bestseller percentage discount. These results indirectly confirm that booksellers discount bestsellers to attract consumers, and that consumers bear significant fixed shopping costs.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2004-07-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1017","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626745","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We assess size and scope-related economies in the global advertising and marketing services business. A translog cost function is employed wherein a firms costs vary according to its scale and two dimensions of the scope of its operations. One dimension of firm scope relates to how its output is distributed across the global markets it serves (domestic vs. overseas) and the other to how its output is distributed across the line of services it offers (advertising-related vs. other marketing services). Parameters of the model are estimated via three stage least squares using annual data (1989-2001) for an unbalanced panel consisting of the eight largest holding companies in this industry.A firms total variable costs are affected by its scale, scope (mix of services and markets served), and by the interaction of the two dimensions of scope. The latter effect suggests that cost economies may accompany the dual diversification strategy of jointly offering advertising and marketing services globally. Estimates indicate that the industrys long-run cost function is subject to very slight economies of scale, i.e., total variable costs increase less than proportionally as outputs increase. Consistent with the presence of modest global scale economies, product-specific diseconomies of scale accompany growth in volume obtained by extending either breadth of service offerings or market coverage. Scope economies arise when cost savings can be realized by a single firm jointly producing several services or jointly serving multiple markets as compared to splitting up the firm into smaller, stand-alone entities, each one producing just one service or serving a single market. A small cost advantage, typically of approximately two percent, is uniformly associated with joint production of services for both the domestic and overseas markets. Cost savings of a similar magnitude arise consistently from the joint production of advertising as well as other marketing services.
{"title":"Holding Company Cost Economies in the Global Advertising and Marketing Services Business","authors":"A. Silk, E. Berndt","doi":"10.2202/1546-5616.1015","DOIUrl":"https://doi.org/10.2202/1546-5616.1015","url":null,"abstract":"We assess size and scope-related economies in the global advertising and marketing services business. A translog cost function is employed wherein a firms costs vary according to its scale and two dimensions of the scope of its operations. One dimension of firm scope relates to how its output is distributed across the global markets it serves (domestic vs. overseas) and the other to how its output is distributed across the line of services it offers (advertising-related vs. other marketing services). Parameters of the model are estimated via three stage least squares using annual data (1989-2001) for an unbalanced panel consisting of the eight largest holding companies in this industry.A firms total variable costs are affected by its scale, scope (mix of services and markets served), and by the interaction of the two dimensions of scope. The latter effect suggests that cost economies may accompany the dual diversification strategy of jointly offering advertising and marketing services globally. Estimates indicate that the industrys long-run cost function is subject to very slight economies of scale, i.e., total variable costs increase less than proportionally as outputs increase. Consistent with the presence of modest global scale economies, product-specific diseconomies of scale accompany growth in volume obtained by extending either breadth of service offerings or market coverage. Scope economies arise when cost savings can be realized by a single firm jointly producing several services or jointly serving multiple markets as compared to splitting up the firm into smaller, stand-alone entities, each one producing just one service or serving a single market. A small cost advantage, typically of approximately two percent, is uniformly associated with joint production of services for both the domestic and overseas markets. Cost savings of a similar magnitude arise consistently from the joint production of advertising as well as other marketing services.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2004-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1015","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626698","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In many durable goods industries, firms continuously offer new products to customers and market them in different versions through different channel of distribution. This paper examines the issue of when to introduce the product into the different channels. The determinants of entry time include the discounting of future profits, the foresight of the firm, customers' expectations, and the possibility of cannibalization. Of special interest is the effect of customers' expectations about the timing of sequential entries. Specifically, it is shown here that profits decline if firms ignore the role of customer expectations. We discuss how our results can be used to get insights into the workings of the US motion picture industry, which is characterized by sequential introduction of movies first into theaters followed by home video. Finally, a closed form solution for an optimal sequential timing policy is provided.
{"title":"Product Entry Timing in Dual Distribution Channels: The Case of the Movie Industry","authors":"A. Prasad, Bart J. Bronnenberg, V. Mahajan","doi":"10.2202/1546-5616.1008","DOIUrl":"https://doi.org/10.2202/1546-5616.1008","url":null,"abstract":"In many durable goods industries, firms continuously offer new products to customers and market them in different versions through different channel of distribution. This paper examines the issue of when to introduce the product into the different channels. The determinants of entry time include the discounting of future profits, the foresight of the firm, customers' expectations, and the possibility of cannibalization. Of special interest is the effect of customers' expectations about the timing of sequential entries. Specifically, it is shown here that profits decline if firms ignore the role of customer expectations. We discuss how our results can be used to get insights into the workings of the US motion picture industry, which is characterized by sequential introduction of movies first into theaters followed by home video. Finally, a closed form solution for an optimal sequential timing policy is provided.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2004-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1008","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626351","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The role of information in high-technology markets is critical (Dutta, Narasimhan and Rajiv 1999; Farrell and Saloner 1986; Weiss and Heide 1993). In these markets, the volatility and volume of information present managers and researchers with the considerable challenge of monitoring such information and examining how potential customers may respond to it. This article examines the effects of the type and volume of information on the market share of different technological standards in the Local Area Networks (LAN) industry. We identify three different types of information: technological, availability and adoption. Our empirical application suggests that all three types of information have significant effects on the market share of a technological standard, but their direction and magnitude differ. More specifically, technology-related information is negatively related to market share as it demonstrates that the underlying technology is immature and still evolving. Both availability and adoption-related information have a positive effect on market share, but the former is larger than the latter. We conclude that high-tech firms should emphasize the dissemination of information, especially availability-related, as part of their promotional strategy for a new technology. Otherwise, they may risk missing an opportunity to achieve a higher share and establish their market presence.
信息在高科技市场中的作用至关重要(Dutta, Narasimhan和Rajiv 1999;法雷尔和塞隆纳1986;Weiss and Heide 1993)。在这些市场中，信息的波动性和数量给管理人员和研究人员带来了相当大的挑战，即监测这些信息并检查潜在客户对这些信息的反应。本文研究了信息的类型和数量对局域网(LAN)行业中不同技术标准的市场份额的影响。我们确定了三种不同类型的信息:技术、可用性和采用。我们的实证应用表明，这三种类型的信息对技术标准的市场份额都有显著的影响，但其方向和大小不同。更具体地说，与技术相关的信息与市场份额呈负相关，因为它表明底层技术不成熟，仍在发展。可用性和采用相关信息都对市场份额有积极影响，但前者比后者更大。我们的结论是，高科技公司应强调信息的传播，特别是与可得性有关的信息的传播，作为其新技术推广战略的一部分。否则，他们可能会失去获得更高份额和建立市场地位的机会。
{"title":"The Relationship between Market Share and Information in a High-Tech Industry","authors":"V. Theoharakis, D. Vakratsas, V. Wong","doi":"10.2202/1546-5616.1005","DOIUrl":"https://doi.org/10.2202/1546-5616.1005","url":null,"abstract":"The role of information in high-technology markets is critical (Dutta, Narasimhan and Rajiv 1999; Farrell and Saloner 1986; Weiss and Heide 1993). In these markets, the volatility and volume of information present managers and researchers with the considerable challenge of monitoring such information and examining how potential customers may respond to it. This article examines the effects of the type and volume of information on the market share of different technological standards in the Local Area Networks (LAN) industry. We identify three different types of information: technological, availability and adoption. Our empirical application suggests that all three types of information have significant effects on the market share of a technological standard, but their direction and magnitude differ. More specifically, technology-related information is negatively related to market share as it demonstrates that the underlying technology is immature and still evolving. Both availability and adoption-related information have a positive effect on market share, but the former is larger than the latter. We conclude that high-tech firms should emphasize the dissemination of information, especially availability-related, as part of their promotional strategy for a new technology. Otherwise, they may risk missing an opportunity to achieve a higher share and establish their market presence.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2004-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1005","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626277","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The marketing literature on product warranty and extended warranty has largely focused on their role as segmentation instruments in risk-averse consumer markets. Preserving this insurance rationale, we highlight the role of extended warranty in channel coordination.We derive explicit demand functions for the durable good and extended warranty from a traditional model of consumer utility. This derivation explicitly captures the complementary goods flavor of extended warranty. We then investigate the impact of different distributional arrangements commonly observed in the marketplace for market outcomes and manufacturer profitability. We show that two key forces drive the results-the complementary goods effect and the double marginalization effect. Different channel arrangements for marketing of extended warranty cause these effects occur at different levels within a distribution channel and these are shown to have significant implications for the optimal warranty policy.
{"title":"Durable Good, Extended Warranty and Channel Coordination","authors":"Preyas S. Desai, Paddy Padmanabhan","doi":"10.2202/1546-5616.1004","DOIUrl":"https://doi.org/10.2202/1546-5616.1004","url":null,"abstract":"The marketing literature on product warranty and extended warranty has largely focused on their role as segmentation instruments in risk-averse consumer markets. Preserving this insurance rationale, we highlight the role of extended warranty in channel coordination.We derive explicit demand functions for the durable good and extended warranty from a traditional model of consumer utility. This derivation explicitly captures the complementary goods flavor of extended warranty. We then investigate the impact of different distributional arrangements commonly observed in the marketplace for market outcomes and manufacturer profitability. We show that two key forces drive the results-the complementary goods effect and the double marginalization effect. Different channel arrangements for marketing of extended warranty cause these effects occur at different levels within a distribution channel and these are shown to have significant implications for the optimal warranty policy.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2004-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1004","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626187","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The finite normal mixture model has emerged as a dominant methodology for assessing heterogeneity in choice models. Although it extends the classic mixture models by allowing within component variablility, it requires that a relatively large number of models be separately estimated and fairly difficult test procedures to determine the correct number of mixing components. We present a very general formulation, based on Dirichlet Process Piror, which yields the number and composition of mixing components a posteriori, obviating the need for post hoc test procedures and is capable of approximating any target heterogeneity distribution. Adapting Stephens (2000) algorithm allows the determination of substantively different clusters, as well as a way to sidestep problems arising from label-switching and overlapping mixtures. These methods are illustrated both on simulated data and A.C. Nielsen scanner panel data for liquid detergents. We find that the large number of mixing components required to adequately represent the heterogeneity distribution can be reduced in practice to a far smaller number of segments of managerial relevance.
{"title":"Assessing Heterogeneity in Discrete Choice Models Using a Dirichlet Process Prior","authors":"Jin Gyo Kim, U. Menzefricke, F. Feinberg","doi":"10.2202/1546-5616.1003","DOIUrl":"https://doi.org/10.2202/1546-5616.1003","url":null,"abstract":"The finite normal mixture model has emerged as a dominant methodology for assessing heterogeneity in choice models. Although it extends the classic mixture models by allowing within component variablility, it requires that a relatively large number of models be separately estimated and fairly difficult test procedures to determine the correct number of mixing components. We present a very general formulation, based on Dirichlet Process Piror, which yields the number and composition of mixing components a posteriori, obviating the need for post hoc test procedures and is capable of approximating any target heterogeneity distribution. Adapting Stephens (2000) algorithm allows the determination of substantively different clusters, as well as a way to sidestep problems arising from label-switching and overlapping mixtures. These methods are illustrated both on simulated data and A.C. Nielsen scanner panel data for liquid detergents. We find that the large number of mixing components required to adequately represent the heterogeneity distribution can be reduced in practice to a far smaller number of segments of managerial relevance.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2004-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1003","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68626078","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we study competitive response to a product innovation. We consider the dynamic interaction between a Defender (a firm with a first generation product) and an Attacker (a firm with a second generation product). The second generation product entry decision of the Defender, as well as the pricing decisions of both firms, are analyzed. Analytical results are derived by developing a 3-period pricing game, and studying closed-loop policies for a Nash equilibrium. These results allow us to identify strategies in which the Attacker can prevent (or delay) a competitive response by the Defender. Some empirical support for our analytical results is also provided by pricing data and information on the timing of successive product generation introductions in the semiconductor and personal computer industries.
{"title":"Competitive Entry and Pricing Responses to Product Innovation","authors":"B. Bayus, Pradeep K. Chintagunta","doi":"10.2202/1546-5616.1001","DOIUrl":"https://doi.org/10.2202/1546-5616.1001","url":null,"abstract":"In this paper, we study competitive response to a product innovation. We consider the dynamic interaction between a Defender (a firm with a first generation product) and an Attacker (a firm with a second generation product). The second generation product entry decision of the Defender, as well as the pricing decisions of both firms, are analyzed. Analytical results are derived by developing a 3-period pricing game, and studying closed-loop policies for a Nash equilibrium. These results allow us to identify strategies in which the Attacker can prevent (or delay) a competitive response by the Defender. Some empirical support for our analytical results is also provided by pricing data and information on the timing of successive product generation introductions in the semiconductor and personal computer industries.","PeriodicalId":35829,"journal":{"name":"Review of Marketing Science","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2003-08-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2202/1546-5616.1001","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68625975","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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