Buy custom PRICE WARS: THE COST OF A COMPETITIVE BEHAVIOUR
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| Topic: |
Business
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| Number of pages / Number of words: |
7 / 1914 |
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Marketing researchers have provided a number of directional insights into the price war phenomenon. For example, in an empirical work by Putsis and Dhar (1998), it is shown that competitive interaction varies significantly across categories depending on the demand and competitive characteristics of the category...
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In a later study by Heil and Helsen (2001), early warning signals of price wars are used to explain this competitive behaviour. The authors identify four general factors that influence price wars: (1) market conditions, (2) firm characteristics, (3) product-related factors, and (4) consumer factors.
In terms of market conditions, Heil and Helsen (2001) hypothesise that: as market entry occurs and an entrant gains or is expected to gain a sizable market position, a price war becomes more likely; if an industry possesses excess capacity, the emergence of price wars is more likely; price wars are more likely to occur and to be more intense in markets with marginal growth; and the incidence of such war is relatively high in markets where market power is highly concentrated and fragmented markets and low for markets with intermediate levels of concentration...
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