Friday, July 23, 2010

Competitive Equilibrium in Marketing

If competitors are nearly identical and make their living in the same way, then their competitive equilibrium is unstable.

If a single major factor is the critical factor, then the competitive equilibrium is unstable.

If multiple factors may be critical factors, then it is possible for each competitior to have some advantage and be differentially attractive to some customers. The more factors that may provide an advantage, the more competitors who can coexist. Competitor all have their segment, defined by the preference fro the factor trade-offs they offer.

The fewer the number of critical competitive variables, the fewer the number of competitiors.

Philip Kotler

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