Fierce Price Competition Research Articles

A systematic approach for simulation-based dimensioning of production systems during the concept phase of factory planning

Due to increasing globalization, market penetration, and technological progress, more products are becoming highly standardized and interchangeable. This has led to fierce price competition, forcing companies to compete for declining margins. To remain competitive in the long term, it is essential to consider both changeability and profitability during the early planning phases. The article proposes an approach for simulation studies using discrete-event simulation during the concept phase of factory planning. This approach aims to systematically dimension production resources while considering alternative scaling options, such as a higher degree of automation. By doing so, the approach facilitates the demand-oriented deployment of resources during the ramp-up phase, which helps to control and reduce manufacturing costs. The simulation experiments yield scaling paths that indicate the timing and quantity of resources required to meet changing demands. These paths form the basis for subsequent factory planning steps. For instance, the layout can incorporate the necessary space for a future automation solution that will be profitable, enabling faster adaptation to demand changes and securing competitive advantages. This is demonstrated in a use case where the approach was applied to the factory planning of a new production system for a sensor product family.

Pricing for services with cross-segment externalities, capacity constraints, and competition

In many service systems such as movie theaters, sports clubs, or hotels, different customer segments share physical space, and the presence of customers from different segments may affect the utility a customer receives from the service. We consider a setting where two competing facilities offer service to two distinct types of customers and study whether and when the firms can benefit from using differential pricing. The two firms do not explicitly decide whether to use uniform or differential pricing. Rather, we derive our findings by characterizing and comparing all equilibria that might arise when differential pricing is feasible. Our results suggest that if the network externalities are symmetric, that is, if the two customer segments feel equally about the presence of customers of the other segment, then the firms never benefit from price differentiation, unless the network externalities are negative and strong when compared to the travel/inconvenience cost that the customers incur when receiving service from their less preferred facility. Interestingly, we find that using differential pricing can even hurt firm profits, when it leads to fierce price competition between the two service providers.

Pricing by Using Target Cost Approach: A Field Study in the Sector of Saudian “Pharmaceutical Industry”

The pricing decision is considered one of the most important managerial decisions, due to its effect on the profitability for the short and long terms, so developing of cost systems becomes a vital matter, should be dealt with is in objectivity and scientifically to achieve the optimum decisions in this field. The increasing importance of this research study that it’s mentioned one of the modern pricing methods, known as the formal objectively cost in pricing. The study came with the aim to define and clear the reality of used price mechanism style in the field of saudy pharmaceutical industry and how much relevant or convenience to the current developments and improvements in the multiform of competitions, then rising high the used pricing methods through suggesting modern pricing formal depending on fierce price competition in the market as abase for pricing decision-making. Both hypotheses in the research study were examined in the mentioned field due to the present big and high competition. The practical data of the study have been collected through the direct watch and personal conversation. In addition to that we also design a questionnaire as well as we applied the analytical study style. The study came out with the following main results: showing main factors effecting pricing decisions and these are: customers, competitors, and cost; adopting traditional pricing methods within globalization and free trading which unable the competition within the common price in the competitive markets; target cost approach which represents a pricing method, planning profit system, and cost management in the competitive environment. The main recommendations of the study are: developing cost systems in order to improve decision making, adopting target cost approach in pricing in order to improve decisions related to pricing. The companies related to this study must create programs, and specialized developed training courses in pricing to splay its employees with the up-dates in this field.

A typology of the collaboration willingness of carriers in hinterland logistics

PurposeA large part of maritime container supply chain costs is generated by carriers in port hinterland logistics. Carriers which operate in the hinterland are under pressure to reduce costs and increase profitability, and they face challenges of fierce price competition. This study aims to explore how collaboration is perceived and implemented by carriers in truck container logistics in the port hinterland as a way to tackle these issues.Design/methodology/approachThis study adopts a qualitative multiple case study approach. Qualitative interviews with carriers in the port hinterland of Hamburg, Germany, were conducted and analyzed using grounded theory.FindingsThe study reveals two collaboration types in the hinterland, based on the different carriers' interpretation of market conditions as changeable or as given, driving their collaboration mindsets and strategic actions: The developer, who has a proactive collaboration mindset and practices strategic maneuvers toward changing poor market conditions through collaboration, and the adapter, who has a defensive collaboration mindset and perceives market conditions as given and constraining collaboration.Research limitations/implicationsThe qualitative results will help researchers better understand how collaboration practices depend on the carriers' subjective interpretations and perceptions of the market.Practical implicationsBased on the findings, managers of carriers gain an understanding of the different types of actors in their market and the relevance of acknowledging these types. Consequently, they can design appropriate strategic measures toward collaboration.Originality/valueThe findings for the first time provide exploratory insights of carriers' mindsets.

Research on Logistics Warehousing Cost of Z Delivery Enterprise and Its Optimization Strategy

Aiming at the fierce price competition in the logistics industry, this paper studied the logistics storage of Z Express enterprises. First, according to the current situation of the logistics enterprise, the current storage problems were found out. To discuss its storage cost in depth, the analysis is carried out from two aspects: the internal structure of storage cost and the external factors. The former uses the activity-based cost method to analyze, and is supplemented by peer benchmark comparison. The latter directly proposes countermeasures based on related issues. Finally, using fuzzy comprehensive evaluation to evaluate the proposed optimization strategy, in order to find an accurate method to optimize the logistics storage cost of Z Express enterprise.

Welfare Effects of Platforms’ Exclusivity Clauses

Abstract Buyers are often active on multiple digital platforms, while gatekeeper platforms can force sellers contractually to use one platform exclusively. This paper considers the welfare effects of such exclusivity clauses for buyers, sellers and platforms in a platform duopoly with a seller membership fee. A setting with partially multihoming buyers and sellers is compared to one with partially multihoming buyers and singlehoming sellers. It is shown that exclusivity clauses predominately harm total welfare. Buyers suffer if sellers are exclusive on one platform, while platforms and sellers benefit from exclusivity clauses under certain conditions. In an environment with exclusivity clauses, when strong cross-group benefits and weak platform differentiation result in fierce price competition, exclusivity clauses can be welfare-enhancing.

A game between green and non-green supply chains considering two-way government intervention and manufacturer competition

Enterprise competition has been transformed into chain-to-chain competition, and green development is imperative under the promotion of policies. Horizontal cooperation between green and non-green manufacturers provides a new direction for the supply chain to improve its core competitiveness. This paper develops competition and cooperation models between two manufacturers for the green and non-green supply chain under two-way government intervention to explore the impact of manufacturers’ horizontal cooperation on decisions and profits of supply chain members. In particular, for a situation without cooperation, we consider a Stackelberg game between two manufacturers. Model solutions and numerical analysis have shown that: 1) Cooperation among manufacturers can not only improve their own profits, but also strengthen environmental welfare. However, cooperation will damage consumer surplus. 2) When consumers are more sensitive to product prices, manufacturers’ cooperative behavior is not conducive to retailers, but with the improvement of consumer environmental awareness, retailers will gradually support their upstream cooperation. 3) Under the simultaneous implementation of government subsidy and punishment strategies, whether green consumption can be promoted is related to the adjustment factor of government subsidies, while the relationship between the green level floor for subsidy and product greenness is affected by the adjustment factor of subsidies and manufacturers’ cooperation. 4) The impacts of fierce price competition and green level competition on supply chain members are opposite; when the price competition is moderate or the green level competition is weak, the manufacturers’ cooperation is also beneficial to the improvement of retailers’ profits. This provides ideas for the development of green supply chain, and provides a reference for the implementation of two-way government intervention policy.

The impact of targeting technologies and consumer multi-homing on digital platform competition

In this paper, we address how targeting and consumer multi-homing impact platform competition and market equilibria in two-sided markets. We analyze platforms that are financed by both advertising and subscription fees, and let them adopt a targeting technology with increasing performance in audience size: a larger audience generates more consumer data, which improves the platforms’ targeting ability and allows them to extract more ad revenues. Targeting therefore increases the importance of attracting consumers. Previous literature has shown that this could result in fierce price competition if consumers subscribe to only one platform (i.e. single-home). Surprisingly, we find that pure single-homing possibly does not constitute a Nash equilibrium. Instead, platforms might rationally set prices that induce consumers to subscribe to more than one platform (i.e. multi-home). With multi-homing, a platform’s audience size is not restricted by the number of subscribers on rival platforms. Hence, multi-homing softens the competition over consumers. We show that this might imply that equilibrium profit is higher with than without targeting, in sharp contrast to what previous literature predicts.

Platform entry and homing as competitive strategies under cross-sided network effects

In a competitive environment, determining when to enter the market and what homing policies should be adopted are crucial strategic decisions for platform-based businesses. In this study, we investigate the interactions between two platforms competing in two-sided markets with cross-sided network effects and determine their prices under different entry and homing strategies. We derive the equilibrium demands of two-sided markets for platforms and the equilibrium prices for two competing platforms. We further conduct a comparative analysis among scenarios with different combinations of homing and entry strategies. We find that early-entry platforms will preserve high margins in large early markets, where fierce price competition occurs once their rivals enter these markets. However, early entry is not always beneficial for platforms because the market-cannibalization effect emerges in the subsequent period. Furthermore, this effect will be amplified by the platforms' homing and entry strategies. In addition, cross-sided network effects lead buyers, sellers, and platforms to prefer a multi-homing policy, which is beneficial for society as a whole. Managerial insights are also provided for platform-based businesses.

Does extended warranty depict competitive advantage to a retailer in a retail-e-tail channel supply chain

For a strong presence of online channel with superior policy traditional brick and mortar channel is losing its footprint rapidly. Under this situation does retail channel survive? To analyze this paper considers a retail-e-tail channel supply chain, where the retailer sells an extended warranty policy purely for its existence given the fierce price competition with the e-tail channel. It is realized that by selling a properly designed extended warranty policy the retailer generates a higher rate of profit margin than the manufacturer. Longer duration of extended warranty at a lower price attracts more customers to buy through the retail channel and hence enhances the retailer’s profit margin. Two different coordination contract mechanisms, namely, all unit quantity discount along with franchise fee, and revenue sharing contracts are proposed to resolve channel conflict and asymmetric Nash bargaining product is used for a particular profit split. It revels under any circumstance the retailer denies manufacturer’s warranty cost-sharing proposal for a better pay off.

Behavior-based pricing in service differentiated industries

Firms often upgrade service level to enhance their profitability, which leads to competing firms at service disadvantages using behavior-based pricing (BBP) strategy to fight back. The interaction between service differentiation and BBP affects the profits of both competitors. In order to explore the impact of BBP on the competition of firms with service differentiation, we use game theory method to construct a two-period dynamic pricing model. We explore the optimal BBP strategy by comparing and analyzing firms sub-game equilibrium profits. The main conclusions are as follows: (ⅰ) the degree of service differentiation and the relative service cost interact to influence firms optimal pricing strategy. Specifically, when the degree of service differentiation is low (high) and the relative service cost is small (large), both firms do not adopt (adopt) BBP. When the degree of service differentiation is low (high) but the relative service cost is large (small), competing firms have mixed strategic Nash equilibrium, and both firms have a certain probability to adopt BBP. (ⅱ) BBP can help low-service firms to make up for the profits loss caused by the service disadvantage under certain conditions. However, it can lead to fierce price competition, which will damage the profits of both.

Pricing Ancillary Service Subscriptions

We investigate heterogeneous customer choice behavior in the presence of main products—ancillary services with options of pay-per-use and subscription—and outside option. The willingness to pay for a service subscription is derived as a closed-form expression, which enables us to characterize the optimal pricing strategy and the impact of service subscriptions on customer surplus. Analytical results and numerical experiments show that offering service subscriptions may result in “win-win,” “win-win-win,” “win-win-lose,” or “lose-lose-win” scenarios or in other situations for the firm, competitors, and customers in a variety of monopolistic and duopolistic scenarios. The advantages of service subscription still remain with heterogeneous customers differing on multiple dimensions including the nominal utility, uncertainty in the need of ancillary service, and purchase frequency. We find that if the product quality for both firms, measured by nominal utility, is not significantly different, more fierce price competition by offering a service subscription may result in a higher customer surplus, compared with that without a service subscription. Ancillary service subscription can help firms to better price-discriminate heterogeneous customers through different subscription decisions and subsequent purchase behavior. This paper was accepted by Gad Allon, operations management.

The Dynamics of Online Consumers’ Response to Price Promotion

How does consumers’ price sensitivity at an online retailer change over time? And can we predict their response to price promotion by identifying the latent states of the online consumer–retailer relationship? Our quantification of transits across the consumer–retailer relationship states provides unique insights. For example, price promotion can strengthen consumers’ loyalty only for at least moderately loyal consumers whereas it is not effective at changing nonloyal consumers’ attitudes toward an online retailer (i.e., from nonloyal to loyal). Being opposed to the results from the off-line market, the consumers even in the strong relationship state are likely to seek more coupons as they increase their online shopping experience. The switching behavior observed even after online consumers reach the strong relationship state shows one aspect of the fierce price competition in the online market. Managers in online retailers pay attention to the recent change in a consumer’s buying behaviors rather than the long-term trend of the consumer’s purchase behavior. For instance, the increase of the recent purchase volume strengthens loyalty toward the retailer and/or the habit of buying without a coupon for the consumers in the strong relationship state.

Raising opportunities in strategic alliance by evaluating efficiency of logistics companies in Vietnam: a case of Cat Lai Port

The current context of Vietnam is that Vietnam is a developing country whose geographical shape is long and dynamic. Its logistics is also in the way of development and promising to have good potential. However, lack experience and technology, small and fragmented operation, fierce price competition among local enterprises, domination from foreign logistics giants are that factors that may hinder the growth of the local sector. It is then believed that cooperation among local firms could promote integration of the supply chain, making it more productive and so increase competitiveness of the industry. The study was conducted to evaluate the efficiency of Vietnamese transportation and logistics firms using Malmquist Productivity Index, crafting a clearer picture of how these firms performed in terms of technical efficiency and innovation. Cat Lai Port being a key role in the industry was taken as a case to analyse strategic alliance opportunities using data envelopment analysis and Grey forecasting. Research findings indicate that half of the samples experienced efficiency progress, half experienced performance regress; most of efficiency improvement came from innovation. The study also found that strategic alliances between Cat Lai Port and some firms potentially improve these firms’ efficiency.

Analyzing the trade competitiveness of Indian coconut sector in the liberalization regime

<p>Coconut export sector in India of late gained an outward orientation, especially since the Coconut Development Board was elevated to the status of export promotion council in the year 2009. In the recent period, the growth rate experienced in the coconut based value added products has been stupendous. Since there is an attempt for global value chain up-gradation at the production node of the sector, it is imperative to analyse our strengths in the world market in comparison with the major competitors. We have used the Revealed Comparative Advantage (RCA) methodology to analyse India’s competitiveness in the exports of major coconut value added products traded across the world. The study revealed that, as far as the coconut value added products are concerned, India is comparatively a very small player with paltry export market shares. The analysis of RCA revealed that comparative advantage of India is lower than the major coconut exporting countries like Philippines, Indonesia and Sri Lanka. The Philippines is the dominant player with highest RCA indices in most of the coconut value added product lines. The study suggests the need to formulate plausible strategies to reach the overseas market and capture the optimal share in market segments. Though we have a strong domestic market base, it is an indubitable fact that in the near future due to the evolving trade agreements even in the domestic sector we may confront fierce price competition from the overseas imports. Hence we need to chalk out modalities and execution plans to elevate our export competitiveness and comparative advantage.</p>

Assessment of the Structure, Conduct, and Performance of the Philippine Telecommunications Industry

Assessment of the Structure, Conduct, and Performance of the Philippine Telecommunications Industry

The true culprits of excessive intrabrand price competition among authorised Mercedes-Benz dealers in Thailand

In recent years, heavy price competition is a common phenomenon in automobile industry. The central focus of this study is an empirical study on current situation of selected brand, Mercedes-Benz, in specific market, Thailand. The study aims to understand why fierce intrabrand price competition has become the norm. The term excessive has been used to indicate that price reduction has gone beyond margin that dealers have. Systematic analysis is being conducted by utilising well-accepted academic frameworks to look at the interacting forces not only at manufacturer level but also at the dealership level. This study is a serious attempt to examine the exact situation and the causes of massive intrabrand price competition.

The true culprits of excessive intrabrand price competition among authorised Mercedes-Benz dealers in Thailand

In recent years, heavy price competition is a common phenomenon in automobile industry. The central focus of this study is an empirical study on current situation of selected brand, Mercedes-Benz, in specific market, Thailand. The study aims to understand why fierce intrabrand price competition has become the norm. The term excessive has been used to indicate that price reduction has gone beyond margin that dealers have. Systematic analysis is being conducted by utilising well-accepted academic frameworks to look at the interacting forces not only at manufacturer level but also at the dealership level. This study is a serious attempt to examine the exact situation and the causes of massive intrabrand price competition.

Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty

Supply chain sustainability has become significantly important in the fashion industry, and more and more fashion brands have invested in developing sustainable supply chains. We note that dual channel system comprising a brand-owned direct channel and retail outsourcing channel is quite common in the fashion industry, and in the latter, buy-back contract is popular between brands and retailers. Therefore, we build a stylized dual channel model with price competition and demand uncertainty to characterize the main properties of a fashion supply chain. Our foci are the sustainability analysis and the channel coordination mechanism. We first design a buy-back contract with return cost to coordinate the channel. We then study supply chain sustainability and examine the effect of two key influencing factors, i.e., price competition and demand uncertainty. Interestingly, we find that a fiercer price competition will lead to a more sustainable supply chain. From the perspective of supply chain managers, we conclude that (1) if managers care about environmental sustainability, fierce price competition is not a suggested strategy; (2) if managers care about economic sustainability, fierce price competition is an advantageous strategy. We also find that high demand uncertainty results in a less sustainable supply chain, in both an environmental and economic sustainability sense.

Restrictions of Third-Party Platforms within Selective Distribution Systems

Third-party platforms, such as Amazon Marketplace, have not only brought a wider variety of choice to consumers, but most importantly prompted a fierce intra-brand and price competition between various suppliers and distributors resulting primarily in a lower price level. However, this development particularly affected suppliers of luxury products, who were prompted to protect the brand image and price level of their products by means of selective distribution. As a result, distributors within such distribution systems were prohibited from selling products via such platforms. As is the case for most vertical restraints, neither the European Commission nor the EU courts have dealt with this issue in their decisional practice. On the other hand, restrictions of third-party platforms have been subject to controversial case law in Germany, though the final word on the issue has still not been spoken. Against this background, this article examines the compatibility of the absolute ban of third-party platforms within selective distribution systems, as well as qualitative requirements that may exist if they are allowed with EU Competition law.