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Perceptual Position and Competitive Brand Strategy in a Two-Dimensional, Two-Brand Market

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  • Gregory S. Carpenter

    (Graduate School of Business, Columbia University, New York, New York 10027)

Abstract

Brand positioning and competitive reaction are important determinants of optimal brand strategy. Analyses of brand strategy have focused on optimal pricing and positioning issues using either empirical models of perceptions and preferences, game theory to examine competition, or both. However, the important issues of advertising and distribution strategy have not been fully addressed. This paper analyzes competition and strategy between two brands that compete in a two-dimensional market with advertising and distribution spending, in addition to prices and product positions. In particular, for a unimodal taste distribution of ideal points we show how \bullet optimal competitive (Nash equilibrium) marketing mix levels and profits depend on the positions of both brands, \bullet brands can reposition to increase profit and under what conditions these strategies imply minimum versus maximum differentiation positioning equilibria, and \bullet how the intensity of advertising and distribution competition affect equilibrium brand positions.

Suggested Citation

  • Gregory S. Carpenter, 1989. "Perceptual Position and Competitive Brand Strategy in a Two-Dimensional, Two-Brand Market," Management Science, INFORMS, vol. 35(9), pages 1029-1044, September.
  • Handle: RePEc:inm:ormnsc:v:35:y:1989:i:9:p:1029-1044
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    File URL: http://dx.doi.org/10.1287/mnsc.35.9.1029
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    Cited by:

    1. Ravi Kumar, K. & Hadjinicola, George C., 1996. "Resource allocation to defensive marketing and manufacturing strategies," European Journal of Operational Research, Elsevier, vol. 94(3), pages 453-466, November.
    2. Lan Luo & P. K. Kannan & Brian T. Ratchford, 2007. "New Product Development Under Channel Acceptance," Marketing Science, INFORMS, vol. 26(2), pages 149-163, 03-04.
    3. Xin (Shane) Wang & Yuying Xie & Harsharanjeet S. Jagpal & Sengun Yeniyurt, 2016. "Coordinating R&D, Product Positioning, and Pricing Strategy: A Duopoly Model," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 3(2), pages 104-114, June.
    4. Yunchuan Liu & Rajeev K. Tyagi, 2011. "The Benefits of Competitive Upward Channel Decentralization," Management Science, INFORMS, vol. 57(4), pages 741-751, April.
    5. Jordi Sintas & Ercilia Álvarez, 2002. "The Consumption of Cultural Products: An Analysis of the Spanish Social Space," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 26(2), pages 115-138, May.
    6. Buechel, Berno & Roehl, Nils, 2015. "Robust equilibria in location games," European Journal of Operational Research, Elsevier, vol. 240(2), pages 505-517.
    7. Marks, Ulf G. & Albers, Sönke, 1995. "Experiments in competitive product positioning: An equilibrium analysis," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 364, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    8. Rajeev K. Tyagi, 2000. "Sequential Product Positioning Under Differential Costs," Management Science, INFORMS, vol. 46(7), pages 928-940, July.
    9. Yong Liu & Daniel S. Putler & Charles B. Weinberg, 2004. "Is Having More Channels Really Better? A Model of Competition Among Commercial Television Broadcasters," Marketing Science, INFORMS, vol. 23(1), pages 120-133, July.
    10. Vishal Singh & Ting Zhu, 2008. "Pricing and Market Concentration in Oligopoly Markets," Marketing Science, INFORMS, vol. 27(6), pages 1020-1035, 11-12.

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    Keywords

    marketing; competition; brand strategy;

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