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The Value of Market Share and the Product Life Cycle---A Game-Theoretic Model

Author

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  • Aneel Karnani

    (Graduate School of Business Administration, University of Michigan, Ann Arbor, Michigan 48109)

Abstract

The paper presents a dynamic, game-theoretic model of marketing competition in an oligopoly. The equilibrium solution to this model is used to investigate how a firm's optimal marketing expenditure per unit sold, which can be interpreted as a measure of the value of market share, depends on current and future market demand, which in turn can be related to the product life cycle. The results support and refine the conventional wisdom that the earlier it is the life cycle, the greater is the value of the market share.

Suggested Citation

  • Aneel Karnani, 1984. "The Value of Market Share and the Product Life Cycle---A Game-Theoretic Model," Management Science, INFORMS, vol. 30(6), pages 696-712, June.
    • Handle: RePEc:inm:ormnsc:v:30:y:1984:i:6:p:696-712
    DOI: 10.1287/mnsc.30.6.696
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    Cited by:

    1. Andrei Bazhanov & Yuri Levin & Mikhail Nediak, 2019. "Resale Price Maintenance with Strategic Customers," Production and Operations Management, Production and Operations Management Society, vol. 28(3), pages 535-549, March.
    2. Ramona Rieckhof, 2017. "The life cycle metaphor: its emergence, understanding, and conceptualisation in business research [Die Lebenszyklusmetapher: Entstehen, Verständnis und Konzeptualisierung in der betriebswirtscha," NachhaltigkeitsManagementForum | Sustainability Management Forum, Springer, vol. 25(1), pages 91-107, June.

    More about this item

    Keywords

    game theory/marketing: competition;

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