Fanning the flames? How media coverage of a price war affects retailers, consumers and investors

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dc.citation.issue5
dc.citation.volume52
dc.contributor.authorvan Heerde HJ
dc.contributor.authorGijsbrechts E
dc.contributor.authorPauwels K
dc.date.available2015-10
dc.date.issued2015-10-01
dc.description.abstractThis 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.
dc.description.publication-statusPublished
dc.format.extent674 - 693
dc.identifierhttp://gateway.webofknowledge.com/gateway/Gateway.cgi?GWVersion=2&SrcApp=PARTNER_APP&SrcAuth=LinksAMR&KeyUT=WOS:000368255900008&DestLinkType=FullRecord&DestApp=ALL_WOS&UsrCustomerID=c5bb3b2499afac691c2e3c1a83ef6fef
dc.identifier.citationJOURNAL OF MARKETING RESEARCH, 2015, 52 (5), pp. 674 - 693
dc.identifier.doi10.1509/jmr.13.0260
dc.identifier.eissn1547-7193
dc.identifier.elements-id256869
dc.identifier.harvestedMassey_Dark
dc.identifier.issn0022-2437
dc.publisherAmerican Marketing Association
dc.relation.isPartOfJOURNAL OF MARKETING RESEARCH
dc.subjectmedia coverage
dc.subjectprice war
dc.subjectretailing
dc.subjecthierarchical Bayes
dc.subjecttime series econometrics
dc.subject.anzsrc1505 Marketing
dc.titleFanning the flames? How media coverage of a price war affects retailers, consumers and investors
dc.typeJournal article
pubs.notesNot known
pubs.organisational-group/Massey University
pubs.organisational-group/Massey University/Massey Business School
pubs.organisational-group/Massey University/Massey Business School/School of Communication, Journalism and Marketing
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