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Strategic Pricing and Detailing Behavior in International Markets

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Author Info

  • Pradeep K. Chintagunta

    ()
    (Graduate School of Business, University of Chicago, Chicago, Illinois 60637)

  • Ramarao Desiraju

    ()
    (Department of Marketing, College of Business Administration, University of Central Florida, Orlando, Florida 32816)

Abstract

We study three determinants of the levels of price and detailing effort across geographic markets: the within-market response to each variable, the nature of interfirm strategic interactions both within that market and across markets. We empirically examine the interactions of Prozac, Zoloft, and Paxil across the United States, the United Kingdom, Germany, France, and Italy. Our results indicate that all three factors driving marketing mix interactions are at play in this product category. The U.S. market is less price-sensitive than the European markets. Detailing elasticities are comparable across the United States, Germany, and Italy, while the United Kingdom and France show greater elasticity. For the U.S. market, we find that almost all deviations from Nash pricing and detailing levels are due to within-market interactions. In the U.K. market, deviations from Nash prices come about due mostly to across-market interactions—both with the United States as well as the rest of Europe, whereas deviations from Nash detailing levels are mainly due to across-market interactions with the United States. For Italy, we observe that both within and across-market interactions affect price and detailing levels. Overall, the pattern of interactions makes observed prices more similar across countries than prices implied by the estimated elasticities. This underscores the importance of considering within- and across-market interactions in developing multimarket strategy.

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File URL: http://dx.doi.org/10.1287/mksc.1030.0029
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Bibliographic Info

Article provided by INFORMS in its journal Marketing Science.

Volume (Year): 24 (2005)
Issue (Month): 1 (June)
Pages: 67-80

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Handle: RePEc:inm:ormksc:v:24:y:2005:i:1:p:67-80

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Related research

Keywords: marketing strategy; international marketing; competition;

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Cited by:
  1. Stremersch, S. & Lemmens, A., 2008. "Sales Growth of New Pharmaceuticals Across the Globe: The Role of Regulatory Regimes," ERIM Report Series Research in Management ERS-2008-026-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
  2. Puneet Manchanda & Dick Wittink & Andrew Ching & Paris Cleanthous & Min Ding & Xiaojing Dong & Peter Leeflang & Sanjog Misra & Natalie Mizik & Sridhar Narayanan & Thomas Steenburgh & Jaap Wieringa & M, 2005. "Understanding Firm, Physician and Consumer Choice Behavior in the Pharmaceutical Industry," Marketing Letters, Springer, vol. 16(3), pages 293-308, December.
  3. Desiraju, Ramarao & Nair, Harikesh S. & Chintagunta, Pradeep, 2004. "Diffusion of New Pharmaceutical Drugs in Developing and Developed Nations," Research Papers 1950, Stanford University, Graduate School of Business.
  4. Ludwig, Jens & Marcotte, Dave E. & Norberg, Karen, 2009. "Anti-depressants and suicide," Journal of Health Economics, Elsevier, vol. 28(3), pages 659-676, May.
  5. Ernst R. Berndt & Patricia M. Danzon & Gregory B. Kruse, 2007. "Dynamic competition in pharmaceuticals: cross-national evidence from new drug diffusion," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 231-250.
  6. Justine S. Hastings & Ali Hortaçsu & Chad Syverson, 2013. "Advertising and Competition in Privatized Social Security: The Case of Mexico," NBER Working Papers 18881, National Bureau of Economic Research, Inc.

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