The Effects of Imbalanced Competition on Demonstration Strategies
This paper analyzes the effect of competition on product demonstration decisions. Pre-purchase product demonstration enables marketers to differentiate products that are ex-post differentiated but are judged according to perceived fit, rather than actual fit, due to pre-purchase consumer uncertainty. Imbalanced competition accompanied by fit uncertainty motivates the follower to offer demonstrations to avoid a price war. This paper explores the conditions that lead the leader to retaliate. In addition to effects on quantity, competition may increase the quality of demonstrations offered by the leader. We analyze a business case, showing that competition may increase the demonstration intensity and that the leading manufacturer’s response to changes in competition is stronger than the responses of the followers. Our research has the potential to aid mangers in formulating demonstration strategies and in responding to competitors’ demonstration efforts.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://departments.agri.huji.ac.il/economics/indexe.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eaton, Jonathan & Grossman, Gene M, 1986. "The Provision of Information as Marketing Strategy," Oxford Economic Papers, Oxford University Press, vol. 38(0), pages 166-83, Suppl. No.
- Eitan Gerstner & James D. Hess, 1995. "Pull Promotions and Channel Coordination," Marketing Science, INFORMS, vol. 14(1), pages 43-60.
- Deneckere, Raymond & Marvel, Howard P & Peck, James, 1996.
"Demand Uncertainty, Inventories, and Resale Price Maintenance,"
The Quarterly Journal of Economics,
MIT Press, vol. 111(3), pages 885-913, August.
- Howard P. Marvel & Raymond Deneckere & James Peck, 1995. "Demand Uncertainty, Inventories, and Resale Price Maintainance," Working Papers 019, Ohio State University, Department of Economics.
- Claude Fluet & Paolo G. Garella, 1999.
"Advertising and Prices as Signals of Quality in a Regime of Price Rivalry,"
Cahiers de recherche du Département des sciences économiques, UQAM
9903, Université du Québec à Montréal, Département des sciences économiques.
- Fluet, Claude & Garella, Paolo G., 2002. "Advertising and prices as signals of quality in a regime of price rivalry," International Journal of Industrial Organization, Elsevier, vol. 20(7), pages 907-930, September.
- Grossman, Gene M & Shapiro, Carl, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 63-81, January.
- Glen L. Urban & John R. Hauser & John H. Roberts, 1990. "Prelaunch Forecasting of New Automobiles," Management Science, INFORMS, vol. 36(4), pages 401-421, April.
- Deneckere, Raymond & Marvel, Howard P & Peck, James, 1997.
"Demand Uncertainty and Price Maintenance: Markdowns as Destructive Competition,"
American Economic Review,
American Economic Association, vol. 87(4), pages 619-41, September.
- Howard P. Marvel & Raymond Deneckere & James Peck, 1995. "Demand Uncertainty and Price Maintainance: Markdowns as Destructive Competition," Working Papers 018, Ohio State University, Department of Economics.
- Klein, Benjamin & Murphy, Kevin M, 1997. "Vertical Integration as a Self-Enforcing Contractual Arrangement," American Economic Review, American Economic Association, vol. 87(2), pages 415-20, May.
- Liang Guo & J. Miguel Villas-Boas, 2007. "Consumer Stockpiling and Price Competition in Differentiated Markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(4), pages 827-858, December.
- Klemperer, Paul, 1987. "Markets with Consumer Switching Costs," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 375-94, May.
- Kyle Bagwell, 1986.
"Informational Product Differentiation as a Barrier to Entry,"
711, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Bagwell, Kyle, 1990. "Informational product differentiation as a barrier to entry," International Journal of Industrial Organization, Elsevier, vol. 8(2), pages 207-223, June.
- Amir Heiman & Bruce McWilliams & Zhihua Shen & David Zilberman, 2001. "Learning and Forgetting: Modeling Optimal Product Sampling Over Time," Management Science, INFORMS, vol. 47(4), pages 532-546, April.
- Donald Lehmann & Mercedes Esteban-Bravo, 2006. "When giving some away makes sense to jump-start the diffusion process," Marketing Letters, Springer, vol. 17(4), pages 243-254, December.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
- J. Miguel Villas-Boas, 2004. "Consumer Learning, Brand Loyalty, and Competition," Marketing Science, INFORMS, vol. 23(1), pages 134-145, December.
- Gerstner, Eitan & Hess, James D & Holthausen, Duncan M, 1994. "Price Discrimination through a Distribution Channel: Theory and Evidence," American Economic Review, American Economic Association, vol. 84(5), pages 1437-45, December.
- R. Venkatesh & Wagner Kamakura, 2003. "Optimal Bundling and Pricing under a Monopoly: Contrasting Complements and Substitutes from Independently Valued Products," The Journal of Business, University of Chicago Press, vol. 76(2), pages 211-232, April.
- Hauser, John R & Wernerfelt, Birger, 1990. " An Evaluation Cost Model of Consideration Sets," Journal of Consumer Research, University of Chicago Press, vol. 16(4), pages 393-408, March.
When requesting a correction, please mention this item's handle: RePEc:ags:huaedp:93131. 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: (AgEcon Search)
If references are entirely missing, you can add them using this form.