Product Positioning Under Price Competition
AbstractThis paper presents a consumer-based methodology for new product pricing and positioning in the face of price competition. The price competition is modelled as a Nash equilibrium for which two complementary approaches are employed: an analytical approach of duopoly provides qualitative insights into the competitive behavior, and a numerical approach of general oligopoly provides quantitative solutions under a wide variety of market scenarios. The optimal product positioning is formulated as a Stackelberg-Nash (leader-followers) equilibrium which can be solved numerically using recent advances in the field of variational inequalities. A small example concerning analgesics is used to illustrate this methodology.
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Bibliographic InfoArticle provided by INFORMS in its journal Management Science.
Volume (Year): 36 (1990)
Issue (Month): 2 (February)
marketing: competitive strategy; product policy; games; noncooperative; programming; variational inequalities;
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