Asymmetric competition in choice and the leveraging of competitive disadvantages

Studies of grocery sales show that consumers of store brands switch to (pri ce) discounted national brands more than consumers of national brands switc h to discounted store brands. Such asymmetric price competition can be expl ained with numerous mechanisms proposed here and elsewhere. We report a cho ice experiment that replicates asymmetric price competition favoring higher -quality competitors and demonstrates asymmetric quality competition favori ng lower-quality competitors. Also demonstrated are multiple mechanisms con tributing to competitive asymmetries, where dominance involving the otherwi se preferred brand is particularly potent (e.g., when a higher-quality, com petitor matches the price of an otherwise preferred lower-quality brand). T he findings implicate modifications to (1) theories of decision making when extended to repeat choice, (2) empirical models of secondary purchase data , and (3) strategies for positioning and attacking brands. Whereas improvin g competitive disadvantages often attracts consumers from competitors more than does improving competitive advantages. this benefit must be weighed ag ainst the differentiation sacrificed by improving competitive disadvantages (improving competitive advantages,,in contrast, increases differentiation) .