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Abstract

Competitive behavior between players in a mature market can have a differentstructure than those in growing markets. Pricing component of the marketing mixis less relied upon to expand market share in growing markets, while there is agreater reliance upon product differentiation and building stronger brand equity.On the other hand, in mature markets, there is usually very little scope for productdifferentiation, so there is a greater reliance on pricing for competitive gains.Since market share expansion in a mature market comes directly from competitivesales declines, pricing strategy changes in one brand leads to a fairlyinstantaneous reaction from other brands in the category and retail prices ingeneral reflect the equilibrium condition of consumption.This paper applies methods from Time Series Econometrics to identifynonstationary behavior and long-run equilibrium of retail prices of brands inmature and evolving markets. The results indicate that long-run equilibrium inprices may be an outcome of the maturity of markets, as the persistence of theshocks in the prices do not result in the persistence in shocks to sales. Thecointegrating condition created by the intense price competition imposes astationarity restriction on sales, hence eliminating the possibility of any long termpricing strategy and pricing becomes tactical.



Item Type: MPRA Paper -

Original Title: Competitive Pricing Analysis in Mature and Evolving Markets A Time Series Approach-

Language: English-

Keywords: Competitive, Pricing, Dynamics, Cointegration, Unit Roots, Retail-

Subjects: C - Mathematical and Quantitative Methods > C1 - Econometric and Statistical Methods and Methodology: General > C10 - GeneralC - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes-





Autor: Joseph, Joy

Fuente: https://mpra.ub.uni-muenchen.de/7685/







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