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

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  • Christian Jaag
  • Helmut Dietl
  • Urs Trinkner
  • Oliver F?rst

Abstract

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.

Suggested Citation

  • Christian Jaag & Helmut Dietl & Urs Trinkner & Oliver F?rst, 2011. "Defending Mail Markets against New Entrants: An Application of the Defender Model," Working Papers 0027, Swiss Economics.
    • Handle: RePEc:chc:wpaper:0027
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    References listed on IDEAS

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    1. 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.
    2. John R. Hauser & Steven M. Shugan, 2008. "Defensive Marketing Strategies," Marketing Science, INFORMS, vol. 27(1), pages 88-110, 01-02.
    3. Ian MacMillan & Mary Lynn McCaffery & Gilles Van Wijk, 1985. "Competitors' responses to easily imitated new products—exploring commercial banking product introductions," Strategic Management Journal, Wiley Blackwell, vol. 6(1), pages 75-86, January.
    4. Helmut M. Dietl & Urs Trinkner & Reto Bleisch, 2005. "Liberalization and Regulation of the Swiss Letter Market," Topics in Regulatory Economics and Policy, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Regulatory and Economic Challenges in the Postal and Delivery Sector, chapter 0, pages 53-72, Springer.
    5. 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.
    6. John R. Hauser & Steven P. Gaskin, 1984. "Application of the “Defender” Consumer Model," Marketing Science, INFORMS, vol. 3(4), pages 327-351.
    7. 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.
    8. X. Ambrosini & S. Bréville & J. Cornée & O. Klargaard, 2011. "Pricing Strategies in Regulated Markets Innovative pricing in the postal sector," Competition and Regulation in Network Industries, Intersentia, vol. 12(1), pages 57-83, March.
    9. 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.
    10. 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.
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    Cited by:

    1. Christian Jaag & Florian Stahl & Benoit Stroelin, 2011. "Commercial and Regulatory Aspects of Reverse Hybrid Mail," Working Papers 0030, Swiss Economics.
    2. Christian Jaag & Urs Trinkner, 2011. "The future of the USO - Economic rationale for universal services and implications for a future-oriented USO," Working Papers 0026, Swiss Economics.
    3. Christian Jaag & Urs Trinkner, 2012. "Defining and financing an intermodal USO," Working Papers 0035, Swiss Economics.

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    More about this item

    Keywords

    Defender model; mail market; competition; postal sector;
    All these keywords.

    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L87 - Industrial Organization - - Industry Studies: Services - - - Postal and Delivery Services

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