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Perceptual Position and Competitive Brand Strategy in a Two-Dimensional, Two-Brand Market

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  • Gregory S. Carpenter

    (Graduate School of Business, Columbia University, New York, New York 10027)

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    Abstract

    Brand positioning and competitive reaction are important determinants of optimal brand strategy. Analyses of brand strategy have focused on optimal pricing and positioning issues using either empirical models of perceptions and preferences, game theory to examine competition, or both. However, the important issues of advertising and distribution strategy have not been fully addressed. This paper analyzes competition and strategy between two brands that compete in a two-dimensional market with advertising and distribution spending, in addition to prices and product positions. In particular, for a unimodal taste distribution of ideal points we show how \bullet optimal competitive (Nash equilibrium) marketing mix levels and profits depend on the positions of both brands, \bullet brands can reposition to increase profit and under what conditions these strategies imply minimum versus maximum differentiation positioning equilibria, and \bullet how the intensity of advertising and distribution competition affect equilibrium brand positions.

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    File URL: http://dx.doi.org/10.1287/mnsc.35.9.1029
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    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 35 (1989)
    Issue (Month): 9 (September)
    Pages: 1029-1044

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    Handle: RePEc:inm:ormnsc:v:35:y:1989:i:9:p:1029-1044

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    Related research

    Keywords: marketing; competition; brand strategy;

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    Cited by:
    1. Yong Liu & Daniel S. Putler & Charles B. Weinberg, 2004. "Is Having More Channels Really Better? A Model of Competition Among Commercial Television Broadcasters," Marketing Science, INFORMS, vol. 23(1), pages 120-133, July.
    2. Jordi Sintas & Ercilia Álvarez, 2002. "The Consumption of Cultural Products: An Analysis of the Spanish Social Space," Journal of Cultural Economics, Springer, vol. 26(2), pages 115-138, May.
    3. Ravi Kumar, K. & Hadjinicola, George C., 1996. "Resource allocation to defensive marketing and manufacturing strategies," European Journal of Operational Research, Elsevier, vol. 94(3), pages 453-466, November.
    4. Berno Buechel & Nils Roehl, 2013. "Robust Equilibria in Location Games," Working Papers Dissertations 03, University of Paderborn, Faculty of Business Administration and Economics.
    5. repec:pdn:wpaper:58 is not listed on IDEAS

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