IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v36y1990i2p175-199.html
   My bibliography  Save this article

Product Positioning Under Price Competition

Author

Listed:
  • S. Chan Choi

    (Department of Marketing and Quantitative Studies, San Jose State University, San Jose, California 95192-0069)

  • Wayne S. Desarbo

    (Marketing and Statistics Departments, University of Michigan, Ann Arbor, Michigan 48109-1234)

  • Patrick T. Harker

    (Decision Sciences Department, The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19104-6366)

Abstract

This paper presents a consumer-based methodology for new product pricing and positioning in the face of price competition. The price competition is modelled as a Nash equilibrium for which two complementary approaches are employed: an analytical approach of duopoly provides qualitative insights into the competitive behavior, and a numerical approach of general oligopoly provides quantitative solutions under a wide variety of market scenarios. The optimal product positioning is formulated as a Stackelberg-Nash (leader-followers) equilibrium which can be solved numerically using recent advances in the field of variational inequalities. A small example concerning analgesics is used to illustrate this methodology.

Suggested Citation

  • S. Chan Choi & Wayne S. Desarbo & Patrick T. Harker, 1990. "Product Positioning Under Price Competition," Management Science, INFORMS, vol. 36(2), pages 175-199, February.
  • Handle: RePEc:inm:ormnsc:v:36:y:1990:i:2:p:175-199
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.36.2.175
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hadjinicola, George C. & Kumar, K. Ravi, 2002. "Modeling manufacturing and marketing options in international operations," International Journal of Production Economics, Elsevier, vol. 75(3), pages 287-304, February.
    2. Paul Windrum, 2003. "Unlocking a Lock-in: Towards a Model of Technological Succession," Chapters,in: Applied Evolutionary Economics, chapter 11 Edward Elgar Publishing.
    3. repec:eee:proeco:v:193:y:2017:i:c:p:207-221 is not listed on IDEAS
    4. Mark B. Vandenbosch & Charles B. Weinberg, 1997. "A value analysis model for farm equipment manufacturers," Agribusiness, John Wiley & Sons, Ltd., vol. 13(4), pages 409-421.
    5. Dominik Kress & Erwin Pesch, 2016. "Competitive Location and Pricing on Networks with Random Utilities," Networks and Spatial Economics, Springer, vol. 16(3), pages 837-863, September.
    6. Gruca, Thomas S. & Klemz, Bruce R., 2003. "Optimal new product positioning: A genetic algorithm approach," European Journal of Operational Research, Elsevier, vol. 146(3), pages 621-633, May.
    7. Anderson, Simon P & de Palma, Andre, 1992. "Multiproduct Firms: A Nested Logit Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 40(3), pages 261-276, September.
    8. Elie Ofek & V. Srinivasan, 2002. "How Much Does the Market Value an Improvement in a Product Attribute?," Marketing Science, INFORMS, vol. 21(4), pages 398-411, June.
    9. Benati, Stefano & Hansen, Pierre, 2002. "The maximum capture problem with random utilities: Problem formulation and algorithms," European Journal of Operational Research, Elsevier, vol. 143(3), pages 518-530, December.
    10. Nuno Faísca & Pedro Saraiva & Berç Rustem & Efstratios Pistikopoulos, 2009. "A multi-parametric programming approach for multilevel hierarchical and decentralised optimisation problems," Computational Management Science, Springer, vol. 6(4), pages 377-397, October.
    11. Bhadury, J. & Eiselt, H. A., 1999. "Brand positioning under lexicographic choice rules," European Journal of Operational Research, Elsevier, vol. 113(1), pages 1-16, February.
    12. Eiselt, H. A. & Laporte, Gilbert, 1997. "Sequential location problems," European Journal of Operational Research, Elsevier, vol. 96(2), pages 217-231, January.
    13. A. de Palma & O. Sanchez, 1998. "Accessibilité dans un système de transport en environnement concurrentiel," THEMA Working Papers 98-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    14. 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.
    15. Krieger, Abba M. & Green, Paul E., 2006. "A tactical model for resource allocation and its application to advertising budgeting," European Journal of Operational Research, Elsevier, vol. 170(3), pages 935-949, May.
    16. Rajeev K. Tyagi, 2000. "Sequential Product Positioning Under Differential Costs," Management Science, INFORMS, vol. 46(7), pages 928-940, July.
    17. Baier, Daniel & Gaul, Wolfgang, 1998. "Optimal product positioning based on paired comparison data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 365-392, November.
    18. Chen, Jing & Grewal, Ravneet, 2013. "Competing in a supply chain via full-refund and no-refund customer returns policies," International Journal of Production Economics, Elsevier, vol. 146(1), pages 246-258.
    19. Windrum, Paul & Birchenhall, Chris, 2002. "Technological diffusion, welfare and growth: technological succession in the presence of network externalities," Research Memorandum 038, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:36:y:1990:i:2:p:175-199. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc). General contact details of provider: http://edirc.repec.org/data/inforea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.