Strategy Dynamics Briefing 52: When type-1 and type-2 rivalry operate together

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It is rare for any type of rivalry to operate entirely alone…

Examining the three main types of rivarly:

  • Type-1 rivalry to capture new potential customers could feasibly happen if the product or service is entirely new, and if any customer, once committed, would find it hard to switch. The market for enterprise-resource-planning systems (ERP) comes close to this ideal – once a substantial business has committed to using SAP it would be complex and costly to throw that out and use something else.
  • Type-2 could only ...
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Strategy Dynamics Briefing 51: Type-2 rivalry – capturing competitors’ customers

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Type-2 rivalry can be explained by taking the coffee store example from Briefing 50 forward in time to a point where all potential customers have been captured; that is, when the market is mature.
The two stores have charged the same expected price of $2.95 for a typical product and each has half of the market’s total of 5 000 customers.

Halfway through the year, the two stores make the same decisions as before: we lower our price to $2.80 and ...

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