Optimal Defensive Strategies under Varying Consumer Distributional Patterns and Market Maturity

Ulrike Schuster and J?rgen W?ckl
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Ulrike Schuster: Vienna University of Economics and Business Administration, Austria
J?rgen W?ckl: Vienna University of Economics and Business Administration, Austria

Journal of Economics and Management, 2005, vol. 1, issue 2, 187-206

Abstract: In this paper we describe a simulation approach to explore optimal defensive strategies concerning an entrant situation in an artificial consumer market. There are two questions of interest concerning the adaptation of the strategy to obtain maximal profits¡Xthe effects of (1) varying heterogeneity of the considered consumer aspiration points and (2) the maturity of the market at the time of entry. The resulting optimal price-budget combinations remain stable up to a certain degree of heterogeneity. Then a threshold is reached beyond which further disaggregating the market leads to boundary solutions. The entrant threshold seems to be slightly lower than the incumbent threshold. In the case of very late entry a boundary solution seems to be optimal for the entrant in the sense of minimizing losses.

Keywords: market maturity; heterogeneity; competition; defensive marketing; continuous model; simulation; optimization (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:jec:journl:v:1:y:2005:i:2:p:187-206

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