Optimal marketing behavior in oligopoly

Lambin, Jean-Jacques; Naert, Philippe A.; Bultez, Alain

doi:10.1016/0014-2921(75)90025-2

Cited by 131 publications

(51 citation statements)

References 17 publications

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“…An empirical base also has been developing, which tends to be industry and case study-based (Smith, Grimm, Chen and Gannon 1991; Chen and MacMillan 1992). Within the marketing literature, the approaches to the study of competitive defense range from the work on reaction matrices of Lambin, Naert and Bultez (1975), Hanssens (1980) and , more recently, Leeflang and Wittink (1992), to the analytical normative approach of Hauser and Shugan (1983), to the PIMS approaches of Robinson (1988), Bowman and Gatignon (1995) and Ramaswamy, Gatignon and Reibstein (1994).Whereas the existing literature is concemed mainly with the likellood or type of reaction, our particular focus is on the success of the firm's reaction strategy. We seek to explain the incombent firm's perception of how successful it was in retaining sales volume and market share when challenged by a new competitive product in the marketplace.…”

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confidence: 99%

Incumbent defense strategies against new product entry

Gatignon

Robertson

Fein

1997

International Journal of Research in Marketing

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The objective of this study is to estimate the effectiveness of different defense strategies when faced with a new product introduction by a competitor. Using a sample of in cumbentsacross a wide range of industries, we find that faster reactions to the new entrant have a positive impact on the perceived success of the defense strategy. However, the greater the breadth of reaction (number of marketing mix instruments used), the less successful is the defense. The ability of an incumbent to maintain its market position is also significantly affected by industry characteristics and the degree of competitive threat posed by the new product entry. A working paper in the INSEAD Working Paper Sertes is intended as a means whereby a faculty researcher's thoughts and findings may be communicated to interested readers. The paper should be considered preliminary in nature and may require révision. INCOMBENT DEFENSE STRATEGIES AGAINST NEW PRODUCT ENTRY AbstractThe objective of this study is to estimate the effectiveness of different defense strategies when faced with a new product introduction by a competitor. Using a sample of incumbents across a wide range of industries, we find that faster reactions to the new entrant have a positive impact on the perceived success of the defense strategy. However, the greater the breadth of reaction (number of marketing mix instruments used), the less successful the defense. The ability of an incumbent to maintain its market position is also significantly affected by industry characteristics and the degree of competitive threat posed by the entrant. INCOMBENT DEFENSE STRATEGIES AGAINST NEW PRODUCT ENTRYThe focus of this research is on the defense strategies that incumbents use when confronted with new competitive products. The goal is to explain the success of reaction strategies, radier than to explain the likelihood of reaction, which is the more prevalent research objective in the extant literature. In other words our concem is not with whether incumbents react, but given that they react, how successful will their responses be? In particular, are faster responses likely to be more successful? Which marketing instruments should be used? Are broad responses (in ternis of number of marketing mix instruments) more successful than narrow responses?The issue of market defense has considerable managerial relevance. In general, as the success of incumbents increases within a product category, the likelihood of new entry increases and with it the need for incumbents to defend their position. In many firms, however, the bias is to develop elaborate new product launch plans but seldom to proactively specify defense plans in advance of a competitive threat (Bazerman and Carroll 1987, Robertson and Gatignon 1991).The bottom line question for managers is what defense strategies will be most effective. More specifically, the question is what responses will be most successful given a certain set of procluct category characteristics and the nature of the competitive threat. It is these mana...

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confidence: 99%

Incumbent defense strategies against new product entry

Gatignon

Robertson

Fein

1997

International Journal of Research in Marketing

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“…This interdependency has been studied in many contributions from a normative and/or empirical point of view (see e.g. Dorfman and Steiner, 1954;Lambin et al, 1975;Bensoussan et al, 1978;Jagpal and Brick, 1982;Welam, 1982;Thompson and Teng, 1984;Carpenter, 1987;Logman, 1992Logman, , 1995Chintagunta et al, 1993 etc. ).…”

Section: Introductionmentioning

confidence: 98%

Analysis of marketing mix interaction effects and interdependencies: a normative approach

Logman¹,

Pauwels

1998

Manage. Decis. Econ.

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“…(2): Lambin et al (1975). (3): Hanssens (1980); Gatignon (1984); Lee ang and Reuyl (1985); Plat and Lee ang (1988); Lee ang and Wittink (1992).…”

Section: Lnb-modelsmentioning

confidence: 99%

“…Several studies analyze competition in durable goods markets. For example, Lambin et al (1975) investigate competition among manufacturers of electronic razors in the West German market, Sudhir (2001) studies car markets, and Kadiyali (1996) and Sudhir et al (2005) address the competitive responsiveness of two major players in the U.S. photographic film industry market.…”

Section: Area Of Applicationmentioning

confidence: 99%

“…For example, Lambin, Naert, and Bultez (1975) calibrate competitive reaction functions (see 2 in Figure 1) using data about a low-priced consumer durable good in West Germany. Extensions to their classical "LNB model" include more advanced competitive reaction functions (3) and demand functions (4).…”

Section: Modeling Competitive Responsiveness: Specification and Estimmentioning

confidence: 99%

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Modeling Competitive Reaction Effects

Leeflang

2008

Schmalenbach Bus Rev

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abstRaCtin this study i critically review models that specify competitive reaction effects. i discuss different model structures and summarize my findings on competitive reaction effects and factors that explain competitive reactions. i discuss the many models of competitive market response that have been developed and classify them into twelve sets of models that are related to each other in a logical manner through the evolutionary model-building concept.JeL-Classification: C2, L13, m31.Keywords: Competition; marketing; models. evolutionaRy Model buildingIn this study I review models that specify competitive reaction effects. Many of the models that have been developed in the past 40 years are connected to models that were developed earlier. Here, I make the connections between different groups of models by using the evolutionary model-building concept. The basic idea of evolutionary model building is that the model builder begins with a relative simple model. Simplicity is paramount so that managers understand these models. Early applications may reveal shortcomings, and diagnostics can be used to guide further model development. The builder then expands the model, which will lead increasing the complexity of the model (Little (1970); Urban and Karash (1971)).The evolutionary model-building concept primarily has been applied in the context of marketing decision models. By gradually adding more complexities to simpler models, both model builders and model users jointly develop a more complete model by incorporating additional elements. The manager (model user) still understands this more complex

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Optimal marketing behavior in oligopoly

Cited by 131 publications

References 17 publications

Incumbent defense strategies against new product entry

Incumbent defense strategies against new product entry

Analysis of marketing mix interaction effects and interdependencies: a normative approach

Modeling Competitive Reaction Effects

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