Abstract

http://ssrn.com/abstract=758507
 
 

Footnotes (10)



 


 



Competitive Pricing Analysis in Mature & Evolving Markets: A Time Series Approach


Joy V. Joseph


Information Resources Inc

June 2005


Abstract:     
Competitive behavior between players in a mature market can have a different structure than those in growing markets. Pricing component of the marketing mix is less relied upon to expand market share in growing markets, while there is a greater reliance upon product differentiation and building stronger brand equity. On the other hand, in mature markets, there is usually very little scope for product differentiation, so there is a greater reliance on pricing for competitive gains. Since market share expansion in a mature market comes directly from competitive sales declines, pricing strategy changes in one brand leads to a fairly instantaneous reaction from other brands in the category and retail prices in general reflect the equilibrium condition of consumption.

This paper applies methods from Time Series Econometrics to identify nonstationary behavior and long-run equilibrium of retail prices of brands in mature and evolving markets. The results indicate that long-run equilibrium in prices may be an outcome of the maturity of markets, as the persistence of the shocks in the prices do not result in the persistence in shocks to sales. The cointegrating condition created by the intense price competition imposes a stationarity restriction on sales, hence eliminating the possibility of any long term pricing strategy and pricing becomes tactical.

Number of Pages in PDF File: 25

Keywords: Price, Competition, Cointegration, Nonstationary, Error Correction

JEL Classification: C22, C1

working papers series


Download This Paper

Date posted: July 21, 2005  

Suggested Citation

Joseph, Joy V., Competitive Pricing Analysis in Mature & Evolving Markets: A Time Series Approach (June 2005). Available at SSRN: http://ssrn.com/abstract=758507 or http://dx.doi.org/10.2139/ssrn.758507

Contact Information

Joy V. Joseph (Contact Author)
Information Resources Inc ( email )
PO Box 6157
Woodbridge, VA 22195
Feedback to SSRN


Paper statistics
Abstract Views: 2,439
Downloads: 365
Download Rank: 44,879
Footnotes:  10

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.547 seconds