Author
Heerde, H. J. van, Gijsbrechts, E., Pauwels, Koen Hendrik
Publication Date
2015-10
Publication Place
-
American Marketing Association
Subject
Media coverage, Price war, Retailing, Hierarchical Bayes, Time series econometrics
Type
Periodical
Language
English
Digital
Yes
Manuscript
No
Library
Özyeğin University
Library Asset ID
0022-2437
Record ID
c22d56b9-fad7-4fc2-97a6-73d0145828d5
Library Location
Business Administration
Date
2015-10
Notes
Due to copyright restrictions, the access to the full text of this article is only available via subscription.
Sample Text
This article explores how media coverage of a price war affects customer, retailer, and investor reactions over time. Using data covering a Dutch supermarket price war (2003–2005), the authors find that price reductions, especially deep reductions, trigger media coverage of the price conflict. This sets off a chain of reactions. Press messages have a significant effect on market share and abnormal stock returns, beyond retailers' own price and advertising. Importantly, this study uncovers striking asymmetries regarding the kind of coverage to which stakeholders react: whereas consumers only respond to the tone of price-related press coverage, retailers and investors only react to its quantity. Next, media coverage feeds back into the retailers' pricing actions: more media coverage triggers new price cuts in addition to those dictated by competitive reactions. As such, media coverage triggers a deeper spiral of price cuts, intensifying the competitive price battle. However, as the price war progresses, media coverage becomes less frequent and less favorable, which decelerates the downward price spiral.
DOI
10.1509/jmr.13.0260
Cilt
52
