When And How Should Firms Differentiate Quality Advertising And Pricing Decisions In A Duopoly
DOWNLOAD
Download When And How Should Firms Differentiate Quality Advertising And Pricing Decisions In A Duopoly PDF/ePub or read online books in Mobi eBooks. Click Download or Read Online button to get When And How Should Firms Differentiate Quality Advertising And Pricing Decisions In A Duopoly book now. This website allows unlimited access to, at the time of writing, more than 1.5 million titles, including hundreds of thousands of titles in various foreign languages. If the content not found or just blank you must refresh this page
When And How Should Firms Differentiate Quality Advertising And Pricing Decisions In A Duopoly
DOWNLOAD
Author : Dominique Olie Lauga
language : en
Publisher:
Release Date : 2018
When And How Should Firms Differentiate Quality Advertising And Pricing Decisions In A Duopoly written by Dominique Olie Lauga and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
One of the hallmarks of competitive interaction is each firm's desire to differentiate from rivals. Although differentiation may be achieved through product related choices, advertising levels may constitute another key mechanism. In this paper, we examine under what conditions firms will elect to differentiate through product quality vs. advertising intensity and characterize the set of equilibria that emerge. Consumers can only purchase from the set of products they are informed about through advertising, and choose the alternative that maximizes their utility. Firms select product quality in a first stage, advertising levels in a second stage, and prices in the last stage. We study two forms of advertising-blanket and targeted. Under blanket advertising, firms communicate indiscriminately and a consumer's probability of seeing an ad depends on the level of ad expenditure. We find that when advertising is ineffective, i.e., the additional awareness generated by a heavy level is modest relative to the cost, both firms choose a light ad spending. This allows them to minimally differentiate in qualities without concern of intense price competition, as each firm expects to have a segment of 'captive' consumers that are only aware of its product. When advertising is moderately effective, one firm shifts to expending heavily on advertising, hence all consumers are aware of its product. However, the rival prefers to differentiate by advertising lightly, while choosing the same maximal quality level. This strategy softens price competition by inducing the heavy-advertiser to price highly more often in order to capitalize on its captive segment and allows the light-advertiser to increase its average price. Interestingly, we show that even if advertising heavily entails no extra cost, one firm will choose to advertise lightly in equilibrium for strategic reasons. When advertising is very effective, both firms advertise heavily. In this scenario, firms must differentiate in qualities in order to achieve positive profits. Under targeted advertising, we let firms choose the segment(s) they wish to inform. We identify conditions such that both firms choose equally high quality products, but advertise to distinct segments; thereby achieving differentiation through ad targeting. We further show that this can result in a pocket of unserved consumers, even though consumers with lower willingness to pay purchase. Generally speaking, we show that allowing market awareness to be determined endogenously suggests far less product differentiation than previously suspected and reveals regions where advertising creates viable differentiation.
Advertising And Differentiated Products
DOWNLOAD
Author : Michael R. Baye
language : en
Publisher: Elsevier
Release Date : 2001-10-04
Advertising And Differentiated Products written by Michael R. Baye and has been published by Elsevier this book supported file pdf, txt, epub, kindle and other format this book has been release on 2001-10-04 with Business & Economics categories.
This volume of papers develops the competence perspective on learning and dynamic capabilities development. The first two papers explore how organizational competence and dynamic capabilities can support the competitive position of a firm. The next two papers are devoted to strategic, organizational, and behavioral perspectives on processes of competence development. The final four papers explore the intellectual challenges that managers face in striking a strategic balance between processes of competence building and competence leveraging. Taken together, the papers in this volume provide a bridge between many traditional management concepts, frameworks, and theoretical perspectives. [Resumen de editor].
Informative Advertising
DOWNLOAD
Author : David Soberman
language : en
Publisher:
Release Date : 2003
Informative Advertising written by David Soberman and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with categories.
Our objective is to broaden the current understanding of how horizontal differentiation interacts with both advertising and pricing by extending the analysis of Grossman and Shapiro (1984) to look at a full range of differentiation conditions. We seek to offer a useful perspective on the relationship between advertising and pricing by focusing attention on competitors whose essential difference prior to advertising and price decisions is product differentiation. We construct a model where demand for a firm's products is driven by three factors: consumers' awareness of products and their attributes, pricing, and the degree of fit between a product's attributes and the needs of the consumer. Following Salop (1979), differentiation is captured by representing the firms as equally spaced points in a unitary circular spatial market. We assume that product attributes are fixed and the firms make decisions about how much to advertise and what prices to set for their products. A distinct element of the model is the mechanism by which advertising makes consumers aware of products. Similar to Grossman and Shapiro (1985), advertising is represented as a series of messages received randomly by consumers in the market and consumers only have interest in a product if they have seen advertising about it. It is important to underline that advertising only affects consumers' awareness of a product and not their valuation of it. In addition, the probability of a consumer seeing a firm's advertising is independent of the consumer's location. The primary finding of our analysis is that the impact of informative advertising on market prices and profits is a function of the pre-existing level of differentiation in the market. Advertising is observed to create distinct groups of consumers based on the advertising to which they have been exposed. The optimal pricing is a function of competing firms balancing the needs of each of the groups that have interest in their products. When the level of differentiation between products is high, increases in advertising have no effect on observed prices. However, when the level of differentiation between products is moderate, increases in advertising tend to drive up prices. Finally, when the level of differentiation is low, we show that higher advertising leads to lower prices and profits. We also find that total welfare can increase when higher advertising leads to higher prices. This highlights the risk of reaching conclusions about the anti-competitive effects of high advertising based solely on an observed relationship between advertising and pricing. In a modified version of the model, we assume that the probability of a consumer seeing a firm's advertising depends on that consumer's location. More specifically, we consider situations in which firms can target heavier advertising to a) customers that are locationally close to them or b) customers that are locationally distant from them. This captures the notion of two different types of markets, one in which firms aggressively pursue the competitor's customers and the other in which firms focus their effort on loyal customers. We find that the targeting of advertising does affect the relationship between advertising and pricing. While the general pattern of results regarding the impact of differentiation on the advertising/price relationship is consistent across the three conditions examined, targeting has a particularly interesting effect in conditions of moderate differentiation. In fact, when distant consumers are targeted, the positive relationship observed with no targeting is reversed and prices fall with higher levels of advertising. However, the most interesting effect of targeted advertising is its effect on overall pricing. In conditions of low differentiation, targeting consumers who are nearby exacerbates price competition and reduces price below the no-targeting price. On the other hand, targeting consumers who are distant results in equilibrium prices that are higher than the no-targeting price. Exactly the opposite is observed when differentiation is moderate. These findings underline the importance of existing differentiation between firms for determining the effect that targeted advertising has on pricing. They also provide a potential explanation for offensive or defensive postures that firms employ in media buying that has not been considered previously.
Informative Advertising And Consumer Search In A Differentiated Products Duopoly
DOWNLOAD
Author : Levent Celik
language : en
Publisher:
Release Date : 2008
Informative Advertising And Consumer Search In A Differentiated Products Duopoly written by Levent Celik and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.
This paper analyzes informative advertising in a duopoly market with differentiated products when consumer search is costless. If consumers are fully rational, exposure to a single advertisement is sufficient for them to obtain complete market information. In this case, firms undersupply advertising compared to the social optimum because of free-riding. If consumers are not fully rational, they may ignore the existence of another firm when the only advertisement they receive quotes the monopoly price. In this case, both firms advertise the monopoly price, and the market may produce too much or too little advertising compared to the social optimum.
Micro Economic
DOWNLOAD
Author : Ms. Shivangi Ameriya
language : en
Publisher: Pencil
Release Date : 2024-06-18
Micro Economic written by Ms. Shivangi Ameriya and has been published by Pencil this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-06-18 with Juvenile Nonfiction categories.
Explore the fundamentals of microeconomics with this comprehensive guide. Delve into the essence of business economics, distinguishing between micro and macro perspectives. Understand the interplay of demand and supply, elasticity, and revenue concepts crucial for market analysis. Unravel the intricacies of production costs, from social to private, and grasp the nuances of economies and diseconomies of scale. Dive into market structures, from perfect competition to monopolistic scenarios, and learn how firms determine prices and outputs. With a focus on consumer behavior, discover the complexities of preferences, budget constraints, and optimization, shedding light on consumption decisions, labor supply, and savings strategies.
Competitive Advertising And Pricing In Duopolies
DOWNLOAD
Author : John R. Hauser
language : en
Publisher:
Release Date : 1987
Competitive Advertising And Pricing In Duopolies written by John R. Hauser and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1987 with Marketing categories.
Agricultural Price Formation In Theory And Reality
DOWNLOAD
Author : Ulrich Koester
language : en
Publisher: Cambridge Scholars Publishing
Release Date : 2023-08-21
Agricultural Price Formation In Theory And Reality written by Ulrich Koester and has been published by Cambridge Scholars Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-08-21 with Business & Economics categories.
The thirteen chapters in this book introduce students to the theory and analysis of price determination in markets for agricultural and food products, and in markets for the main factors of production in agriculture – land, labour and capital. The book is targeted at advanced BSc as well as MSc students. It covers neoclassical economic theory as well as the many unique institutions and policies that affect agricultural price determination. The chapters cover important characteristics of agricultural and food markets and prices, such as the role of institutions and organisations for agricultural price formation, imperfect competition, the role of technical change, retail pricing, price volatility and futures markets. The included case studies and exercises will enable students to apply what they have learned and test their comprehension.
Management Science
DOWNLOAD
Author :
language : en
Publisher:
Release Date : 1996
Management Science written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996 with Industrial management categories.
Issues for Feb. 1965-Aug. 1967 include Bulletin of the Institute of Management Sciences.
Marketing Science
DOWNLOAD
Author :
language : en
Publisher:
Release Date : 1995
Marketing Science written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995 with Management science categories.
Industrial Organization
DOWNLOAD
Author : Oz Shy
language : en
Publisher: MIT Press
Release Date : 1996-01-17
Industrial Organization written by Oz Shy and has been published by MIT Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996-01-17 with Business & Economics categories.
This upper-level undergraduate text provides an introduction to industrial organization theory along with applications and nontechnical analyses of the legal system and antitrust laws. Using the modern approach but without emphasizing the mathematical generality inherent in many of the arguments, it bridges the gap between existing nontheoretical texts written for undergraduates and highly technical texts written for graduate students. The book can also be used in masters' programs, and advanced graduate students will find it a convenient guide to modern industrial organization.The treatment is rigorous and comprehensive. A wide range of models of all widely used market structures, strategic marketing devices, compatibility and standards, advertising, R&D, as well as more traditional topics are considered in versions much simplified from the originals but that retain the basic intuition. Shy first defines the issues that industrial organization addresses and then develops the tools needed to attack the basic questions. He begins with perfect competition and then considers imperfectly competitive market structures including a wide variety of monopolies, and all forms of quantity and price competitions. The last chapter provides a helpful feature for students by showing how various theories may be related to particular industries but not to others. Topics include: the basics needed to understand modern industrial organization; market structure (monopoly, homogenous products, differentiated products); mergers and entry; research and development; economics of compatibility and standards; advertising; quality and durability; pricing tactics; marketing tactics; management, compensation, and information; price dispersion and search theory; and special industries.