Game Theoretic Derivations of Competitive Strategies in Conjoint Analysis

Marketing Letters, Volume 4, Issue 4, pp 337-348 (1993)

12 Pages Posted: 4 Jun 2016

See all articles by S Chan Choi

S Chan Choi

Rutgers Business School

Wayne S. DeSarbo

Pennsylvania State University

Date Written: October 1993

Abstract

While conjoint analysis has been applied in a wide variety of different contexts in Marketing, most applications fail to explicitly consider retaliatory reactions from competitors. In this paper, a methodological extension is developed for conjoint analysis by explicitly modeling competition in a game theoretic context. The Nash equilibrium concept is employed to model competitive reactions to produce design, and its implications for reactive product strategies are discussed. The optimal product design problem for each firm is formulated as a nonlinear integer programming problem, which is solved via a specialized branch and bound method combined with a heuristic. In order to compute a Nash equilibrium, a sequential iterative procedure is proposed. The proposed procedure is illustrated under several scenarios of competition using previously published conjoint data.

Keywords: Product Design, Product Competition, Conjoint Analysis, Game Theory

Suggested Citation

Choi, S Chan and DeSarbo, Wayne S., Game Theoretic Derivations of Competitive Strategies in Conjoint Analysis (October 1993). Marketing Letters, Volume 4, Issue 4, pp 337-348 (1993), Available at SSRN: https://ssrn.com/abstract=2789064

S Chan Choi

Rutgers Business School ( email )

100 Rockafeller Road
Piscataway, NJ 08854
United States

HOME PAGE: http://www.business.rutgers.edu/faculty-research/directory/choi-chan

Wayne S. DeSarbo (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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