Defending Mail Markets against New Entrants: An Application of the Defender Model
AbstractIn this paper we analyzed the strategic competition between incumbent postal operators and market entrants in liberalized letter markets based on the “defender consumer model” pioneered by Hauser and Shugan (1983) and derived qualitative normative implications on how an established firm should defend its profits when facing an attack by a new competitive product. Our results extend the literature on competition in liberalized mail markets by combining pricing and positioning strategies from a marketing perspective. Our analysis highlights that incumbent postal operators can defend their market shares by differentiating their services along one or more quality dimensions. Postal services are not necessarily homogenous. If postal operators focus solely on pricing strategies they will run into the more serious problems than if they compete on quality too.
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Bibliographic InfoPaper provided by Swiss Economics in its series Working Papers with number 0027.
Date of creation: Jul 2011
Date of revision:
Defender model; mail market; competition; postal sector;
Find related papers by JEL classification:
- L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
- L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-07-27 (All new papers)
- NEP-COM-2011-07-27 (Industrial Competition)
- NEP-HME-2011-07-27 (Heterodox Microeconomics)
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6121, University Library of Munich, Germany.
- Christian Jaag, 2007. "Liberalization of the Swiss Letter Market and the Viability of Universal Service Obligations," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(III), pages 261-282, September.
- Christian Jaag, 2007. "Liberalization of the Swiss Letter Market and the Viability of Universal Service Obligations," Working Papers 0006, Swiss Economics.
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- John R. Hauser & Steven M. Shugan, 1983.
"Defensive Marketing Strategies,"
INFORMS, vol. 2(4), pages 319-360.
- Christian Jaag & Urs Trinkner, 2011. "The interaction between universal service costing and financing in the postal sector: a calibrated approach," Journal of Regulatory Economics, Springer, vol. 39(1), pages 89-110, February.
- John R. Hauser & Patricia Simmie, 1981. "Profit Maximizing Perceptual Positions: An Integrated Theory for the Selection of Product Features and Price," Management Science, INFORMS, vol. 27(1), pages 33-56, January.
- Helmut M. Dietl & Peter Waller, 2002. "Competing With Mr. Postman: Business Strategies, Industry Structure, And Competitive Prices In Liberalized Letter Markets," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 54(2), pages 148-170, April.
- Christian Jaag & Florian Stahl & Benoit Stroelin, 2011. "Commercial and Regulatory Aspects of Reverse Hybrid Mail," Working Papers 0030, Swiss Economics.
- Christian Jaag & Urs Trinkner, 2011. "The future of the USO - Economic rationale for universal services and implications for a future-oriented USO," Working Papers 0026, Swiss Economics.
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