Strategic Implications of Keeping Product Value Secret from Competitor’s Customers

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dc.contributor.authorHarutyunyan, Mushegh
dc.contributor.authorJiang, Baojun
dc.creatorMushegh, Harutyunyan
dc.date.accessioned2017-12-20T03:12:42Z
dc.date.available2017-12-20T03:12:42Z
dc.date.issued2017-09-01
dc.description.abstractAbstract Customers can sometimes learn unanticipated or hidden use value of a firm’s product whereas the non-customers remain uninformed about that extra value. A monopolist will increase its profit by informing the non-customers of its product’s hidden value. However, our analysis reveals that this may not be true when the firm faces competition in the market—the firm may actually make a higher profit if it keeps its hidden value secret from its competitor’s customers even if advertising to inform those customers is costless. This is because no advertising leads to information heterogeneity among consumers about the existence of the firm’s hidden value, which gives an incentive for both firms to continue targeting their own existing customers rather than poaching each other’s customers, alleviating price competition and increasing firms’ profits. This beneficial strategic effect of keeping some product value secret from the competitor’s customers can persist even when the firms anticipate the hidden value and compete more aggressively for customers in the early period. Our research suggests that firms can benefit from an “under-promise and over-deliver” strategy if they refrain from communicating their extra value to the competitor’s customers. Moreover, positive word of mouth about a firm’s product will not necessarily benefit the firm and can in fact make all firms worse off.en_US
dc.identifierDOI:10.1016/j.jretai.2017.06.002
dc.identifier.citationMushegh Harutyunyan, Baojun Jiang, Strategic Implications of Keeping Product Value Secret from Competitor’s Customers, In Journal of Retailing, Volume 93, Issue 3, 2017, Pages 382-399en_US
dc.identifier.issn00224359
dc.identifier.urihttps://www.sciencedirect.com/science/article/pii/S0022435917300507
dc.identifier.urihttp://nur.nu.edu.kz/handle/123456789/2951
dc.language.isoenen_US
dc.publisherJournal of Retailingen_US
dc.relation.ispartofJournal of Retailing
dc.rights.license© 2017 New York University. Published by Elsevier Inc. All rights reserved.
dc.subjectDynamic pricingen_US
dc.subjectCompetitive strategyen_US
dc.subjectInformation disclosureen_US
dc.subjectAdvertisingen_US
dc.subjectTargeted marketingen_US
dc.subjectWord of mouthen_US
dc.titleStrategic Implications of Keeping Product Value Secret from Competitor’s Customersen_US
dc.typeArticleen_US
elsevier.aggregationtypeJournal
elsevier.coverdate2017-09-01
elsevier.coverdisplaydateSeptember 2017
elsevier.endingpage399
elsevier.identifier.doi10.1016/j.jretai.2017.06.002
elsevier.identifier.eid1-s2.0-S0022435917300507
elsevier.identifier.piiS0022-4359(17)30050-7
elsevier.identifier.scopusid85023629424
elsevier.issue.identifier3
elsevier.openaccess0
elsevier.openaccessarticlefalse
elsevier.openarchivearticlefalse
elsevier.startingpage382
elsevier.teaserCustomers can sometimes learn unanticipated or hidden use value of a firm’s product whereas the non-customers remain uninformed about that extra value. A monopolist will increase its profit by informing...
elsevier.volume93
workflow.import.sourcescience

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