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on Marketing |
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Issue of 2010‒06‒26
four papers chosen by Joao Carlos Correia Leitao University of Beira Interior and Technical University of Lisbon |
| By: | George Deltas (Department of Economics, University of Illinois, U.-C., United States); Thanasis Stengos (Department of Economics, University of Guelph, Canada); Eleftherios Zacharias (Department of Economics, Athens School of Economics, Greece) |
| Abstract: | This paper empirically examines the joint pricing decision of products in a firm's product line. When products are distinguished by a vertical characteristic, those products with higher values of that characteristic will command higher prices. We investigate whether, holding the value of the characteristic constant, there is a price premium for products on the industry and/or the firm frontier, i.e., for the products with the highest value of the characteristic in the market or in a firm's product line. The existence of price premia for lower ranked products is also investigated. Finally, the paper investigates whether firms set prices to avoid cannibalizing the other products in their portfolio, whether competition with rival firms is stronger for products that are closer to the frontier compared to other products, and whether a product's price declines with the time it is ownered by a firm. Using personal computer price data, we show that prices decline with the distance from the industry and firm frontiers. We find evidence that consumer tastes for brands is stronger for the consumers of frontier products (and thus competition between firms weaker in the top end of the market). Finally, there is evidence that a product's price is higher if a firm offers products with the immediately faster and immediately slower computer chip (holding the total number of a firm's offerings constant), possibly as an attempt way to reduce cannibalization. |
| Keywords: | Pricing, Multiproduct firms, Personal Computers, Product Entry and Exit |
| JEL: | L11 D43 L63 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:14_10&r=mkt |
| By: | Valérie Sabatier (GAEL - Economie Appliquée de Grenoble - INRA : UR1215 - Université Pierre Mendès-France - Grenoble II, 3PX Therapeutics - 3PX Therapeutics, MTS - Management Technologique et Strategique - Grenoble Ecole de Management); Vincent Mangematin (MTS - Management Technologique et Strategique - Grenoble Ecole de Management); Tristan Rouselle (3PX Therapeutics - 3PX Therapeutics) |
| Abstract: | At the crossroad of firm's core competencies and of the anticipations of consumers' needs, the business model approach complements corporate and business strategy approaches. Firms combine several business models simultaneously to deliver value to different markets, building a portfolio of business model. For managers, business model and business model portfolio are particularly useful to address customer's needs and organisational capabilities of the firm. They also emphasise how the initial core competency of the firm can be extended or redeployed to increase the rent. Business model portfolio describes the firm's strategy to balance time-to-market, revenue stream, risk and interdependencies. It conceptualises firm diversification within the same industry to generate and capture rents. They finally describe two generic dimensions: core competence extension to enlarge the market and to address additional customers and core competence redeployment to serve similar market with the same core competence. |
| Keywords: | Biopharmaceutical; portfolio; corporate strategy; business strategy; core competence; coherence; value chain |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hal:gemptp:hal-00430782_v1&r=mkt |
| By: | Juan Esteban Carranza |
| Abstract: | This paper contains an empirical dynamic model of supply and demand in the market for digital cameras with endogenous product innovation. On the demand side, heterogeneous consumers time optimally the purchase of goods depending on the expected evolution of prices and characteristics of available cameras. On the supply side, firms introduce new camera models accounting for the dynamic value of new products and the optimal behavior of consumers. The model is estimated using data from the market for digital cameras and the estimated model replicates rich dynamic features of the data. The estimated model is used to perform counterfactual computations, which suggest that more competition or lower product introduction costs generate more product variety but lower average product quality. |
| Date: | 2010–06–16 |
| URL: | http://d.repec.org/n?u=RePEc:col:000130:007127&r=mkt |
| By: | Robert T. Jensen; Nolan H. Miller |
| Abstract: | Many developing countries use food-price subsidies or price controls to improve the nutrition of the poor. However, subsidizing goods on which households spend a high proportion of their budget can create large wealth effects. Consumers may then substitute towards foods with higher non-nutritional attributes (e.g., taste), but lower nutritional content per unit of currency, weakening or perhaps even reversing the intended impact of the subsidy. We analyze data from a randomized program of large price subsidies for poor households in two provinces of China and find no evidence that the subsidies improved nutrition. In fact, it may have had a negative impact for some households. |
| JEL: | I38 O12 Q18 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:16102&r=mkt |