Who Competes with Whom? A Demand-Based Perspective for Identifying and Representing Asymmetric Competition

Strategic Management Journal, Volume 27, Issue 2, pages 101–129

Posted: 11 Jun 2016

See all articles by Wayne S. DeSarbo

Wayne S. DeSarbo

Pennsylvania State University

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School

Yoram Jerry Wind

University of Pennsylvania - Marketing Department

Date Written: February 2006

Abstract

A host of strategic management and marketing issues, including competitive analysis and strategic decision making, hinges on accurately identifying and representing competitive market structures. It is readily acknowledged that competitive market structures are typically asymmetric; namely, one firm may actively compete with another in a given market but not vice versa. However, empirical efforts to assess these competitive asymmetries have been lacking in the strategy literature. We propose a new spatial methodology to identify and represent asymmetric competitive market structures. Specifically, we devise a new stochastic multidimensional scaling procedure that is calibrated from actual consumer consideration/choice sets to estimate and uncover competitive asymmetries. The proposed methodology can be effectively employed in the analysis of appropriate data from either demand- or supply-side approaches to assess competitive market structure. We illustrate our proposed methodology with survey data collected from two different commercial applications: one from the U.S. luxury automobile market and the other from the U.S. portable telephone market. We contrast the findings of the proposed methodology against traditional symmetric approaches for identifying and representing competitive market structures, and discuss the respective strategic insights.

Keywords: competitive market structure, asymmetric competition, competitive strategy, multidimensional scaling

Suggested Citation

DeSarbo, Wayne S. and Grewal, Rajdeep and Wind, Yoram Jerry, Who Competes with Whom? A Demand-Based Perspective for Identifying and Representing Asymmetric Competition (February 2006). Strategic Management Journal, Volume 27, Issue 2, pages 101–129, Available at SSRN: https://ssrn.com/abstract=2793433

Wayne S. DeSarbo (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Rajdeep Grewal

University of North Carolina (UNC) at Chapel Hill - Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States

Yoram Jerry Wind

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

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