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Positioning of new brands in an experiment Vera Hofer·Klaus Ladner Abstract This paper deals with an experimental investigation of positioning new this purpose,a management game was carried out with stu- brands introduced in the cause of the game were analysed in respect to their positions in a two-dimensional feature try to find out which of the two strategies,niche policy and imitation,is more frequently used in complex decision situations and if there is a difference in , we want to find out,whether differences of prices and advertising exist in our experiment depending on the positioning strategy used. Keywords Product differentiation·Heterogeneous oligopoly·Imitation· Niche policy·Complex decision situation 1 Introduction Brand positioning aims at firms’designing their range of products such that their products occupy a specific place in consumer awareness(Kotler and Bliemel 1995,).The term product positioning is not used unambiguously in the literature(Hüttel 1998,).Some authors see product positioning as the determination of the respective marketing mixes, of all sales (B)· Department of Statistics and Operations Research, Karl-Franzens-Universit?t Graz, Universit?tsstra?e 15,8010 Graz,Austria e-mail: e-mail: decisions( literature in Hüttel 1998,).In the present paper,the term positioning is used to mean the determination of specific product features. The possibility of different brand positioning only arises in a heterogeneous such markets brand positioning leads to some extent of product distinguishes between horizontal and vertical prod- uct differentiation,depending on whether there is a ranking among consumers based on their willingness to pay for the product(Mangani and Patelli 2001). Horizontal product differentiation is characterized by everyone’s preferring a different product given equal prices,and it is normally associated with the presence of product are vertically differentiated when all consumers choose the same product given equal of horizontal product differentiation are the models by Hotelling(1929)and D’Aspremont et al.(1979).Among others,vertical product differentiation is considered by Mussa and Rosen(1978)and Shaked and Sutton(1982). Depending on the extent to which firms exhaust the possibility of different brand positioning,a higher or lower degree of product differentiation results. Theoretical studies try to find out the equilibrium degree of product differen- ‘principle of differentiation’, or minimum differentiation cannot be derived from the literature(Brenner 2001;Egli 2005). Rather,the amount of differentiation depends on several parameters of the market structure,such as the possibility of discriminatory pricing and price- matching,demand elasticity,the number of firms,existence of advertising tools, the shape of transport costs,the concentration of consumers in the centre of the market and a firm’s uncertainty regarding the heterogeneity of consumers’ preferences concerning a further dimension of product characteristics(Brenner 2001). Theoretical predictions of firms’decision behaviour in a context of multidi- mensional product differentiation are difficult to test empirically,because of the lack of data and agree among researchers about how to measure vertical and horizontal product order to fill this gap,experimental stud- ies on product differentiation were carried out recently(Mangani and Patelli 2001). The experiments of Brown-Kurse et al.(1993)and Collins and Sherstyuk (2000)deal with spatial differentiation without price competition of two or three firms, et al.(2000)investigates product differen- tiation and price competition in a discrete version of the Hotelling ía- Gallego and Georgantzís(2001)consider multiproduct firms in a symmetric differentiated oligopoly market with uncertainty to test the predictive power of Bertrand–Nash and Thisse(1998)considered multidimen- sional horizontal product further experiment by Mangani and Patelli(2001)was based on their model,but simplified to only two continuous, horizontal studies try to find out if there is a maximum or minimum and Patelli(2001)investigate the relation between product differentiation and are exper- iments considering not only the sellers’behaviour but also the consumers’.Positioning of new brands in an experiment 437 Camacho-Cuena et al.(2005)investigate spatial product differentiation with endogenous prices in a discrete version of Hotelling’s linear market. In the present paper,we investigate product differentiation in a two- dimensional,horizontal product firms can offer several products differing with regard to two discrete taste characteristics,graininess and tart- product differentiation is possible by means of advertising and wrapping in our our dynamic oligopoly mar- ket there is price competition,and uncertainty as to a lack of information on the demand structure. In contrast to other experiments,we investigate a very complex decision values of several determinants of product differentiation as men- tioned before Brenner(2001)are mainly dependent on the particular decision situations in the course of the game, the decision behaviour of the par- instance,demand elasticity is determined not only by the price of a brand but also by other firms’decisions that cannot be predicted,and by various this,the market model is so complex that the participants are not capable of recognizing the values of the determinants of product shown in Hofer and Ladner(2005,),the underlying structure of demand was not to many factors influencing the economic success of a brand,the incentives for posi- tioning brands according to a higher or lower degree of differentiation are not such a complex model in which the participants are left with a lack of knowledge concerning the economically reasonable degree of product differentiation,we investigate various product positioning strategies for intro- ducing new express different degrees of product differentiation. In addition,we analyse the interrelation between these positioning strategies and the decisions with regard to vertical product dimensions and par- ticular we are interested,whether product differentiation is seen as a means of relaxing price competition. The question of how to position brands is not only important when intro- ducing a new brand(first positioning).It is also of relevance for existing brands when enlarging one’s own market potential or when differentiating a brand from its competitors by repositioning(Trommsdorf 2002,).Trommsdorf mentions two main positioning concepts(Trommsdorf 2002,):market exhaustion, of brands in the centre of the consumers’ideal con- ceptions or in a potent market segment,and differentiation, of brands as far away from competitive brands as (1999, )remarks that in the literature placing products in niches is presented as the main idea for optimal product positioning,even though there may possi- bly be only few consumers available in such a addition,studies have shown that the strategy of imitation of successful behaviour,a strategy that is not attributable to one of Trommsdorf’s categories,is often observed in complex decision situations and can be economically successful(Pingle and Day 1996; Schewe 2002;Schipper 2002).However,imitation depends more on watching the competitors than watching the consumers. In this paper,we investigate three types of positioning strategies: policy exhaustion For this purpose we consider four positioning strategies,developed by Reinfeldt(1972):one strategy representing imitation,two strategies represent- ing niche policy and one strategy representing market the present study,we try to answer the questions: