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- Title
PRODUCT POSITIONING UNDER PRICE COMPETITION.
- Authors
Choi, S. Chan; Desarbo, Wayne S.; Harker, Patrick T.
- 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.
- Subjects
PRICING; PRODUCT management research; STRATEGIC planning; ECONOMIC equilibrium; MULTIDIMENSIONAL scaling; VARIATIONAL inequalities (Mathematics); CONSUMER preferences research; MARKET positioning; ECONOMIC competition; ELASTICITY (Economics)
- Publication
Management Science, 1990, Vol 36, Issue 2, p175
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.36.2.175