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| Author: | Shaffer, G. Zhang, Z. J. |
| Title: | Competitive One-to-One Promotions |
| Journal: | Management Science
2002 : SEP, VOL. 48:9, p. 1143-1160 |
| Index terms: | DATA BASES MARKETING GAME THEORY STRATEGY PRICE DISCRIMINATION |
| Language: | eng |
| Abstract: | One-to-one promotions are possible when consumers are individually addressable and firms know something about each customer's preferences. The authors explore the competitive effects of one-to-one promotions in a model with two competing firms where the firms differ in size and consumers have heterogeneous brand loyalty. The authors find that one-to-one promotions always lead to an increase in price competition (average prices in the market decrease). However, the authors also find that one-to-one promotions affect market shares. This market- share effect may outweigh the effect of lower prices, benefiting the firm whose market share increases. The authors' results suggest that of two firms, the firm with the higher-quality product may gain from one-to-one promotions. |
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