Optimal Defensive Strategies under Varying Consumer Distributional Patterns and Market Maturity

Abstract

In this paper we describe a simulation approach to explore optimal defensive strategies_x000D_ concerning an entrant situation in an artificial consumer market. There are two questions of_x000D_ interest concerning the adaptation of the strategy to obtain maximal profits—the effects of (1)varying heterogeneity of the considered consumer aspiration points and (2) the maturity of the market at the time of entry. The resulting optimal price-budget combinations remain stable up_x000D_ to a certain degree of heterogeneity. Then a threshold is reached beyond which further_x000D_ disaggregating the market leads to boundary solutions. The entrant threshold seems to be_x000D_ slightly lower than the incumbent threshold. In the case of very late entry a boundary solution_x000D_ seems to be optimal for the entrant in the sense of minimizing losses.