difference is not statistically significant (test statistics not shown in Table 8). == Insert Table 8 here == As Table 9 demonstrates, the results from the counterfactual pricing experiments corrobo- rate the findings of Table 8. 8 On the one hand, switching from a skimming to a penetration strat- egy would have deteriorated discounted profits considerably. On the other hand, switching from a penetration to a skimming strategy would lead to substantial profit improvements. Except for the switch of skimming to penetration in the low-price segment, all mean percentage gains and losses of Table 9 are significantly different from zero. Hence, we conclude, that for the analyzed digital camera market, a skimming price strategy at the camera level yields higher discounted profits than a penetration price strategy. == Insert Table 9 here == We acknowledge that our findings are eventually derived from a structural model that is based on specific assumptions about the behavior of market agents. Even though the proposed model appears be most consistent with the data, we repeated our profit analyses for two alterna- tive structural models in which the retailer is given more power by assuming a Vertical Nash game. Retailers maximize either category profits or brand profits. No fundamental changes in results and conclusions occurred from these analyses (see the Web appendix for details). Hence, we have some confidence that our profit implication results are not driven by model assumptions. Analysis at the Firm Level (Product Portfolios) The analysis at the camera level reveals that the NPV of an individual product can be in- creased if firms switch from a penetration to a skimming strategy. Table 6 shows that firms actu- ally chose a penetration strategy for many cameras. So, a natural question arises: why do firms adopt the penetration strategy at all? The answer may be given by a profit analysis at the firm
30 level that takes cost and demand interdependencies among cameras into account. For this analy- sis, we focus on the top ten manufacturers as these firms’ products account for more than 80% in total sales and 47% of cameras (see Table 2 again). From Table 2, we see that firms such as Aip- tek, Jenoptik (a national player), and Yakumo focused their activities on the low-price segment and established leading brands in this segment. In contrast, Canon, Nikon, Olympus, and Sony focus almost exclusively on the medium-price and high-price segments. The segment focus of Fujifilm, Eastman Kodak, and Konica Minolta is less clear. The left half of Table 10 shows the relative distribution of pricing strategies for these firms and their brands. The dominant strategy, i.e., the most frequently used strategy by brand, is highlighted in bold figures. 9 Six out of ten firms adopted skimming as the dominant pricing strat- egy, which is in line with the conclusion from the product-level analysis that camera NPV is higher for skimming than for penetration. This set of firms includes the firms that are particularly focused on the medium-price and high-price segments, where buyers are less price-oriented and products more differentiated. All three firms that focus on the low-price segment adopted pene-
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