Bill Saporito takes on the issue of price wars in his article, "Why the Price Wars Never End," (Fortune, March 23, 1992, pp. 68-78). Price wars are used to increase market share by increasing volume, but the tactical goal of greatly decreasing prices, putting a competitor out of business, is hard to achieve in today's environment of mergers and acquisitions and liberal bankruptcy laws. The result is that consumers come to expect increasingly lower prices while manufacturers watch their profit margins erode as they week to maintain their market share. Increased investment in fixed assets means that there are barriers to exit which make it difficult for manufacturers to leave unprofitable markets.
In his article, "Price Elasticity Dynamics Over the Adoption Life Cycle," (Journal of Marketing Research, XXIX, August 1992, pp. 358-367), Philip M. Parker examines research regarding price elasticity over the adoption phase of products. Parker contrasts the lack of research in this area with the large body of research that has been conducted with regard to price elasticity over the product life cycle or brand life cycles. Parker puts forth the hypothesis that price elasticities of adoption begin low and then increase as the adoption life cycle matures, a hypothesis that his study rejects. Instead, product factors appear to regulate elasticity dynamics.
Donald Lichtenstein, Nancy Ridgway and Richard Netemeyer examine the effects that pricing has on consumer preferences in their article, "Price Perceptions and Consumer Shopping Behavior: A Field Study" (Journal of Marketing Research XXX, May 1993, pp. 234-245). The authors suggest that pricing can be perceived in either a positive or a negative context depending on the constructs surrounding its use. Negative constructs include value consciousness, price consciousness, coupon proneness, sale proneness and price mavenism, while positive constructs include price-quality schema and ...