Category Pricing with State-Dependent Utility

Dubé, Jean-Pierre; Hitsch, Günter J.; Rossi, Peter E.; Vitorino, Maria Ana

doi:10.1287/mksc.1070.0305

Cited by 75 publications

(45 citation statements)

References 16 publications

(20 reference statements)

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“…An increase in the competitive intensity within a product category tends to promote a growing number of competing options, cause a decline in differentiation, and ultimately create a climate for firms to compete on price [12,15,16]. Consistent with this expectation, the meta-analysis on firm growth finds that competitive intensity has a significant negative impact on growth [3].…”

Section: Main Effectsmentioning

confidence: 79%

Exploration- and Exploitation-Oriented Marketing Strategies and Sales Growth in Emerging Markets

Vila

Bharadwaj

Bahadir

2015

Cust. Need. and Solut.

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Extant marketing literature recognizes unique and varied aspects of marketing in emerging markets (EMs), and in this study, we also argue that significant market-structure changes within many EMs are creating new challenges and opportunities for managers. In particular, we propose that managers must simultaneously implement exploitation and exploration strategies to confront a high degree of dynamism in EMs reflected via changes in retail structures, competitive intensities, and category characteristics. The results from a panel dataset of 15 EMs across Africa, Asia, Europe, and South America find evidence for the critical nature of exploitation strategies aimed at expanding the affordability and availability of existing products. We also find support for the importance of exploration strategies, in the form of innovative product portfolio, as a way to mitigate the effects of changes in market conditions. The results indicate that marketing managers must emphasize ambidextrous marketing strategy in EMs instead of viewing EMs strictly as sources of horizontal growth for established products in developed markets.

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Section: Main Effectsmentioning

confidence: 79%

Exploration- and Exploitation-Oriented Marketing Strategies and Sales Growth in Emerging Markets

Vila

Bharadwaj

Bahadir

2015

Cust. Need. and Solut.

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“…First, inertia is modeled as an incremental cost paid conditional on switching plans (following, e.g., Handel 2013;Shum 2004;or Dube et al 2008). This implies that, on average, for a family to switch at t they must prefer an alternative option by $η more than their default.…”

Section: B Baseline Model With Inertiamentioning

confidence: 99%

Health Insurance for “Humans”: Information Frictions, Plan Choice, and Consumer Welfare

Handel

Kolstad

2015

American Economic Review

291

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In both employer-sponsored health insurance markets and the health insurance exchanges introduced as a part of national health reform, consumers grapple with how to choose an insurance plan from a menu of options. As in the markets for other complex products, such as, e.g., cellular phone plans or financial investment vehicles, in health insurance markets real-world consumers may struggle to either obtain or process information in a way consistent with the homo economicus model typically used to study behavior in these settings. How consumers value different product attributes, what consumers know about those attributes, and how these preferences and information translate into choices is fundamental to market design and regulation, for health insurance and beyond. Without detailed knowledge of these micro-foundations it is difficult to precisely answer key policy questions such as

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“…Erdem (1996), Roy, Chintagunta, and Haldar (1996), Keane (1997), Seetharaman, Ainslie, and Chintagunta (1999), Seetharaman 2004 andDubé et al (2006)). Of course, switching costs can come from a variety of sources including product adoption costs, shopping/search costs, and psychological sources.…”

Section: Introductionmentioning

confidence: 99%

Do Switching Costs Make Markets Less Competitive?

2008

Self Cite

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The conventional wisdom in economic theory holds that switching costs make markets less competitive. This paper challenges this claim. We formulate an empirically realistic model of dynamic price competition that allows for differentiated products and imperfect lock-in. We calibrate this model with data from frequently purchased packaged goods markets. These data are ideal in the sense that they have the necessary variation to separately identify switching costs from consumer heterogeneity. Equally important, consumers exhibit inertia in their brand choices, a form of psychological switching cost. This makes our results applicable to the broad range of products that are distinctly identified (i.e. branded) rather than just to those products for which there is a product adoption cost or explicit switching fee. In our simulations, prices are as much as 18 per cent lower with than without switching costs.

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Category Pricing with State-Dependent Utility

Cited by 75 publications

References 16 publications

Exploration- and Exploitation-Oriented Marketing Strategies and Sales Growth in Emerging Markets

Exploration- and Exploitation-Oriented Marketing Strategies and Sales Growth in Emerging Markets

Health Insurance for “Humans”: Information Frictions, Plan Choice, and Consumer Welfare

Do Switching Costs Make Markets Less Competitive?

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