In the 1960s Procter & Gamble recognized that disposable diapers could be made a mass- market product
Question:
a. In considering these possible tactics, why should managers at Procter & Gamble be concerned about their costs?
b. Why should managers be concerned with the costs to an entrant?
c. By the 1990s Procter & Gamble had to compete with high-quality, private-label diapers (as well as with Kimberly- Clark, which successfully entered the market in the 1970s). In March 1993 its Pampers brand had about 30% of the market, and its Luvs brand had about 10%. The price of Luvs and Pampers exceeded that of discount brands by over 30%. Should Procter & Gamble have cut its prices?
d. In 1993 Procter & Gamble sued Paragon Trade Brands, a private-label producer, alleging infringement of two patents. Are lawsuits of this kind part of the process of oligopolistic rivalry and struggle?
Step by Step Answer:
Managerial Economics Theory Applications and Cases
ISBN: 978-0393912777
8th edition
Authors: Bruce Allen, Keith Weigelt, Neil A. Doherty, Edwin Mansfield