Brand positioning under lexicographic choice rules

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Joyendu Bhadury, Professor, Information Systems and Supply Chain Management (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: This paper discusses a brand positioning model in which two brands of a product are to be positioned in a price-quality space under a new behavioral assumption. This assumption asserts that customers determine the highest-quality product within their reservation price and purchase it, provided its quality does not fall short of a minimum standard. The model also includes producers' costs that are incurred for delivering a certain quality. We first delineate reaction functions for the optimal location of one brand, give a location of its competitor. We then show that Nash equilibria do not exist as long as price and quality are both variable. Finally, we consider a two phase model: in the first phase, the duopolists sequentially choose their quality levels under the assumption that both competitors know that in the second phase, a Nash equilibrium in prices follows. Single-variable mathematical programming formulations are presented to solve the problem. A numerical example is also given to illustrate the working of the model.

Additional Information

European Journal of Operational Research, Vol. 113, 1-16. doi:10.1016/S0377-2217(97)00417-7
Language: English
Date: 1999
Brand positioning, Competitive location model, Nash equilibrium, Stackelberg solution

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