Studies of grocery sales show that consumers of store brands switch to (price) discounted national brands more than consumers of national brands switch to discounted store brands. Such asymmetric price competition can be explained with numerous mechanisms proposed here and elsewhere. We report a choice experiment that replicates asymmetric price competition favoring higher-quality competitors and demonstrates asymmetric quality competition favoring lower-quality competitors. Also demonstrated are multiple mechanisms contributing to competitive asymmetries, where dominance involving the otherwise preferred brand is particularly potent (e.g., when a higher-quality competitor matches the price of an otherwise preferred lower-quality brand). The findings implicate modifications to (1) theories of decision making when extended to repeat choice, (2) empirical models of secondary purchase data, and (3) strategies for positioning and attacking brands. Whereas improving competitive disadvantages often attracts consumers from competitors more than does improving competitive advantages, this benefit must be weighed against the differentiation sacrificed by improving competitive disadvantages (improving competitive advantages, in contrast, increases differentiation). Copyright 2000 by the University of Chicago.
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Volume (Year): 27 (2000) Issue (Month): 3 (December) Pages: 291-308 Download reference. The following formats are available: HTML
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Dellaert,Benedict G.C. & Stremersch,Stefan, 2004.
"Consumer Preferences for Mass Customization,"
Research Memoranda
044, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization.
[Downloadable!]
Other versions:
Dellaert, B.G.C. & Stremersch, S., 2004.
"Consumer Preferences for Mass Customization,"
Research Paper
ERS-2004-087-MKT Revision, 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.
[Downloadable!]
Eric Johnson & Simon Gaechter & Andreas Herrmann, 2006.
"Exploring the Nature of Loss Aversion,"
Discussion Papers
2006-02, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
[Downloadable!]