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Strategic Positioning of Goods in a Market with a Niche

Author

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  • Eleftherios Zacharias

    () (Department of Economics, Athens University of Economics and Business, Greece; The Rimini Centre for Economic Analysis, Italy)

Abstract

We use the Hotelling's model allowing for a "gap" in the consumers' preferences. As a result, the characteristics space is divided in two separate intervals. The largest one represents the main market, and the smallest represents a niche. We find that in this set up the principle of maximum differentiation may not hold. We also, examine the incentives of a firm to adopt a niche marketing strategy. That is, to relocate and price its product so that to maximize its profits from the niche market only. We show that, as the reservation value of the consumers for the product increases, it is more profitable for a firm to adopt a niche marketing strategy.

Suggested Citation

  • Eleftherios Zacharias, 2013. "Strategic Positioning of Goods in a Market with a Niche," Working Paper series 36_13, Rimini Centre for Economic Analysis.
  • Handle: RePEc:rim:rimwps:36_13
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    References listed on IDEAS

    as
    1. Tabuchi, Takatoshi & Thisse, Jacques-Francois, 1995. "Asymmetric equilibria in spatial competition," International Journal of Industrial Organization, Elsevier, vol. 13(2), pages 213-227.
    2. Anderson, Simon P. & Goeree, Jacob K. & Ramer, Roald, 1997. "Location, Location, Location," Journal of Economic Theory, Elsevier, vol. 77(1), pages 102-127, November.
    3. Konstantinos Serfes & Eleftherios Zacharias, 2012. "Location Decisions of Competing Networks," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(4), pages 989-1005, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Hotelling model; niche marketing; market segmentation;

    JEL classification:

    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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