Sheff Peym

Competitive Marketing Strategy Sheff Peym

Better-informed consumers, increased competition and moves towards standardization can all increase the price elasticity of demand, put pressure on margins and increase sensitivity to costs. Costs may fall for a variety of reasons, such as economies of scale, experience curve effects, process improvements and competitive pressures squeezing inefficiencies out of the system. When this is combined with increasing competitive pressure on margins, prices may fall. Many of the positions and players are well established, consumers are now well informed about the industry and the players, so advertising is oriented to defending and improving on established market bases. If firms are still influenced by the high growth rates that were possible during the growth phase, brand advertising can be expensive and fierce. The later stages of the growth phase may have seen firms moving into profitability, but now market entry and increasing standardization both put pressure on margins. Erosion of patent protection, increasing information about what constitutes the 'best' design, and tightening competition pushing out inferior designs can all contribute to a convergence on an industry standard. This tendency will be reinforced if there are network effects in which there are advantages in having a single technical specification