Positioning and pricing in a variety seeking market / S. Sajeesh in Management science, Vol. 56 N° 6 (Juin 2010)  

Public ISBD [article]  inManagement science > Vol. 56 N° 6 (Juin 2010) . - pp. 949-961 Titre : Positioning and pricing in a variety seeking market Type de document : texte imprimé Auteurs : S. Sajeesh, Auteur ; Jagmohan S. Raju, Auteur Année de publication : 2010 Article en page(s) : pp. 949-961 Note générale : Management Langues : Anglais (eng) Mots-clés : Variety seeking Positioning Pricing Differentiation Hotelling models Index. décimale : 658 Organisation des entreprises. Techniques du commerce Résumé : We study competitive positioning and pricing strategies in markets where consumers seek variety. Variety seeking behavior is modeled as a decrease in the willingness to pay for the product purchased on the previous purchase occasion. Using a three-stage Hotelling-type model, we show that the presence of variety seeking consumers reduces product differentiation offered in equilibrium, thereby explaining some otherwise counterintuitive findings in empirical research. We find that firms charge higher prices in Period 1 and lower prices in Period 2. The lower price in Period 2 represents the price incentive that firms need to offer to prevent the variety seeking consumers from switching. Furthermore, we find that the observed switching in a market may not fully capture the true magnitude of the underlying variety seeking tendencies among consumers. Finally, we show that the presence of variety seeking consumers leads to lower firm profits and a higher consumer surplus. Surplus increases for variety seeking consumers as well as regular consumers. Therefore, the presence of variety seeking consumers benefits everyone in the market. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/56/6.toc [article] Positioning and pricing in a variety seeking market [texte imprimé] / S. Sajeesh, Auteur ; Jagmohan S. Raju, Auteur . - 2010 . - pp. 949-961. Management Langues : Anglais (eng) in Management science > Vol. 56 N° 6 (Juin 2010) . - pp. 949-961 Mots-clés : Variety seeking Positioning Pricing Differentiation Hotelling models Index. décimale : 658 Organisation des entreprises. Techniques du commerce Résumé : We study competitive positioning and pricing strategies in markets where consumers seek variety. Variety seeking behavior is modeled as a decrease in the willingness to pay for the product purchased on the previous purchase occasion. Using a three-stage Hotelling-type model, we show that the presence of variety seeking consumers reduces product differentiation offered in equilibrium, thereby explaining some otherwise counterintuitive findings in empirical research. We find that firms charge higher prices in Period 1 and lower prices in Period 2. The lower price in Period 2 represents the price incentive that firms need to offer to prevent the variety seeking consumers from switching. Furthermore, we find that the observed switching in a market may not fully capture the true magnitude of the underlying variety seeking tendencies among consumers. Finally, we show that the presence of variety seeking consumers leads to lower firm profits and a higher consumer surplus. Surplus increases for variety seeking consumers as well as regular consumers. Therefore, the presence of variety seeking consumers benefits everyone in the market. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/content/56/6.toc

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