Competitive Retailer Strategies for New Market Research,Entry and Positioning Decisions |
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| Affiliation: | 1. International Business School, Beijing Foreign Studies University, Beijing 100089, China;2. Leavey School of Business, Santa Clara University, Santa Clara, CA 95053, United States;3. International Business College, Dongbei University of Finance and Economics, Dalian, China;4. School of Business and Management & School of Engineering, The Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong;5. Department of Business Administration, National Taiwan University, No. 1, Sec. 4, Roosevelt Rd., Taipei 10617, Taiwan (R.O.C.);1. Singapore Management University, Singapore;2. Brigham Young University, United States;3. University of Wisconsin-Madison, United States;1. Department of Marketing, Monash University, Australia;2. Department of Marketing, Faculty of Business and Economics, Monash University, Caulfield, Melbourne, Victoria 3145, Australia;1. Konkuk University, 120 Neungdong-ro, Gwangjin-gu, Seoul 05029, Republic of Korea;2. Syracuse University, 721 University Avenue, Syracuse, NY 13244, USA;3. Korea University, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Republic of Korea;1. Price College of Business, The University of Oklahoma, Norman, OK 73019, United States;2. University of Missouri – Kansas City, Henry W. Bloch School of Management, Kansas City, MO 64110-2499, United States;3. Shanghai Jiao Tong University, China;1. Konkuk University, 120 Neungdong-ro, Gwangjin-gu, Seoul 05029, Republic of Korea;2. Syracuse University, 721 University Avenue, Syracuse, NY 13244, USA;3. Korea University, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Republic of Korea |
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| Abstract: | This paper investigates strategies for new market research and positioning of stores or products by competing retailers in a duopoly setting. We examine the scenario where the two retailers are considering entry into an uncertain new market that is an extension of their existing markets. The retailers must make decisions on whether or not to first conduct research about the new market's location relative to their existing markets and its size before deciding on their own positioning in it. We first study a sequential-move leader–follower setup to highlight the choice of an “innovate-or-imitate” strategy. We find when the potential new market is small, neither retailer is adequately incentivized to do research to acquire information about the new market. As the size of the new market increases, the follower is induced to do such research. When the new market is very sizable, the leader conducts research and knows the new market's location while the follower free-rides. We then examine a simultaneous-move setup, in which one retailer might decide against acquiring new market information even when the cost of doing so is low. We further observe that differentiation (e.g., in terms of products or store locations) is greater in the simultaneous-move setup than in the sequential setup. |
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| Keywords: | Market research Positioning Retail market uncertainty Competitive strategies Game theory |
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