Oliver P. Heil

Toward an understanding of price wars: Their nature and how they erupt

Abstract This paper aims to improve our understanding of the unique phenomenon of market competition, called price wars, as little is known about their nature and how they erupt. More precisely, we offer selected illustrations of the reality of price wars, identify key attributes of price wars, propose a definition of price wars, and offer a conceptual framework in which early warning signals (EWSs) of price wars are distilled and linked to the likelihood and the intensity of such wars. Also, initial empirical findings on some of the effects of price wars are offered, showing that price wars inflict substantial damage on the companies involved. Implications for researchers entail that numerous research opportunities exist to better understand price wars and to eventually develop a theory of price wars that may become a vital part of a firms portfolio of competitive pricing strategies.

Explaining competitive reactions to new products: An empirical signaling study

This article develops a conceptual model to help explain the strength of competitive reactions to new product introductions and presents the findings from a preliminary empirical investigation of this model. Being able to explain the strength of competitive reactions to new product introductions is important, as such reactions often determine a products success or failure in the marketplace. To explain these reactions Oliver Heil and Rockney Walters investigate competitive market signals associated with new product introductions and the reactions of competing firms to the signals. The authors empirically test the hypothesized linkages among three market signals—hostility, consequences and commitment—and competitive reactions using primary data collected from a large number of US corporations. The empirical results show that the market signaling variables explain a significant portion of the variance in the perceived strength of competitive reactions to new product introductions. The study has implications for managers introducing new products and for researchers studying new product introductions and competition.

Kooperation und Coopetition: Erklärungsperspektive der Spieltheorie

Die Ehrung mit dem Nobelpreis im Jahr 1994 fur die spieltheoretischen Arbeiten von Reinhard Selten, John Nash und John Charles Harsanyi unterstreichen die Relevanz der Spieltheorie in den Wirtschaftswissenschaften. Die Spieltheorie stellt haufig eine mathematische Beschreibung und Analyse von Interaktionen konkurrierender Parteien bereit, in denen neben Spielregeln die einzelnen Strategien den Ausgang des Spiels determinieren (Marschak/Selten 1978; Luce/Raiffa 1957; Shubik 1983). Im Bereich der Wirtschaftswissenschaften erlangen Manager durch die Spieltheorie ein Verstandnis, in welcher Situation sich Marktakteure befinden und welche Auswirkung eine bestimmte Aktion, Reaktion oder Wettbewerbsinteraktion haben kann. Uber die Identifikation von Gleichgewichten und Gleichgewichtsstrategien konnen einem Unternehmen mittels der Spieltheorie die Folgen des Handelns aufgezeigt werden.

Identifying the Luxury Sustainability Paradox: Three Steps Toward a Solution

In this chapter, we argue about a paradox of sustainability in the context of luxury goods and brands: Intuitively, luxury brands should be more sustainable versus normal brands, since consumer’s willingness to pay is high which should allow for highest standards in quality, including sustainability. However, many of the most expensive luxury products appear to exhibit limited sustainability. Examples include sports cars that typically are gas guzzlers, yachts that often carry only a few people but require a high amount of resources to be operated, or fur products that require animals to give their lives for. For example, the Hermes Birkin bag recently received a lot of negative media due to the alleged (mis-)treatment of crocodiles. Hence, albeit a bit counterintuitive, many luxurious products seem less sustainable than they could and probably should these days causing what we call the “Luxury Sustainability Paradox” to surface. In essence, luxury products’ superiority appears to not span across all attributes and, paradoxically, to do so may be very challenging if not impossible. In short: being at the absolute top along certain luxury or performance attributes may, paradoxically, preclude top scores on sustainability.