RFID-based Entry into the German B2B Parcel Market and its Effect on Competitive Strategies, Prices and Market Shares: The Case of Red Parcel Post
AbstractThis paper analyzes the market entry of Red Parcel Post, a new player in the German Business-to-Business (B2B) parcel market. Currently there are four large service providers in the German B2B parcel market. Each of these incumbent providers operates - albeit with varying degrees of automation - with a classical multi-hub-and-spoke network. Red Parcel Post plans to enter the B2B parcel market with a completely new parcel delivery system for the delivery of B2B parcels throughout Germany based on a new transport network design, and RFID- and GPS-based operations. Such operations shall enable the entrant to offer new services to potential customers and realize lower costs and prices than the established firms. We describe the market and contrast the incumbents' and the entrant's business strategies. Moreover, we develop a model to analyze the effect of the entrant's market entry on competitive strategies, market shares, prices, costs and profits. First, we solve the game-theoretic model analytically to derive qualitative results. In a second step, we simulate market entry and competition by calibrating the model with data from the German B2B market illustrating the impact of market entry in various scenarios.
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Bibliographic InfoPaper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0084.
Length: 28 pages
Date of creation: Aug 2008
Date of revision: Oct 2009
Market entry; incumbent; competitive strategies; market shares; B2B parcel market; Cournot model; calibration;
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-07-14 (All new papers)
- NEP-COM-2008-07-14 (Industrial Competition)
- NEP-CSE-2008-07-14 (Economics of Strategic Management)
- NEP-MIC-2008-07-14 (Microeconomics)
- NEP-MKT-2008-07-14 (Marketing)
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