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Defending Mail Markets against New Entrants: An Application of the Defender Model

  • Christian Jaag
  • Helmut Dietl
  • Urs Trinkner
  • Oliver Fürst

In this paper we analyzed the strategic competition between incumbent postal operators and market entrants in liberalized letter markets based on the “defender consumer model” pioneered by Hauser and Shugan (1983) and derived qualitative normative implications on how an established firm should defend its profits when facing an attack by a new competitive product. Our results extend the literature on competition in liberalized mail markets by combining pricing and positioning strategies from a marketing perspective. Our analysis highlights that incumbent postal operators can defend their market shares by differentiating their services along one or more quality dimensions. Postal services are not necessarily homogenous. If postal operators focus solely on pricing strategies they will run into the more serious problems than if they compete on quality too.

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File URL: http://www.swiss-economics.ch/RePEc/files/0027JaagDietlTrinknerFurst.pdf
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Paper provided by Swiss Economics in its series Working Papers with number 0027.

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Date of creation: Jul 2011
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Handle: RePEc:chc:wpaper:0027
Contact details of provider: Web page: http://www.swiss-economics.ch
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  1. Helmut M. Dietl & Peter Waller, 2002. "Competing With Mr. Postman: Business Strategies, Industry Structure, And Competitive Prices In Liberalized Letter Markets," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 54(2), pages 148-170, April.
  2. John R. Hauser & Steven M. Shugan, 1983. "Defensive Marketing Strategies," Marketing Science, INFORMS, vol. 2(4), pages 319-360.
  3. Christian Jaag, 2007. "Liberalization of the Swiss Letter Market and the Viability of Universal Service Obligations," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 143(III), pages 261-282, September.
  4. Ajay Kalra & Surendra Rajiv & Kannan Srinivasan, 1998. "Response to Competitive Entry: A Rationale for Delayed Defensive Reaction," Marketing Science, INFORMS, vol. 17(4), pages 380-405.
  5. John R. Hauser & Steven P. Gaskin, 1984. "Application of the “Defender” Consumer Model," Marketing Science, INFORMS, vol. 3(4), pages 327-351.
  6. John R. Hauser & Patricia Simmie, 1981. "Profit Maximizing Perceptual Positions: An Integrated Theory for the Selection of Product Features and Price," Management Science, INFORMS, vol. 27(1), pages 33-56, January.
  7. Christian Jaag & Urs Trinkner, 2011. "The interaction between universal service costing and financing in the postal sector: a calibrated approach," Journal of Regulatory Economics, Springer, vol. 39(1), pages 89-110, February.
  8. Helmut M. Dietl & Urs Trinkner & Reto Bleisch, 2004. "Liberalization and Regulation of the Swiss Letter Market," Working Papers 0001, Swiss Economics, revised Jul 2005.
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