Open Access Subscription Access
Open Access Subscription Access
Antecedents and Consequences of Price Wars Among Hotels in Egypt
The hotel industry is often suffering from price wars, which have a number of reasons such as financial crises. Resulting from these reasons are going to reduce prices. The continued price reductions among hotels, resulting in price wars. So, this paper searches for developing and empirically testing a framework to examine which factors causes the price wars and the consequences of them. Using SEM to examine the data collected from a sample of 113 hotels, the results indicate supply, financial crises, pricing objectives based on discounts, and price sensitivity have a significant positive impact on price wars’ eruption. Price wars have a significant negative influence significantly on hotel profitability, hotel image, competitive position, brand loyalty. On the other hand, price wars may lead to exit from market. The results offer important implications for hoteliers and are likely to stimulate further research in the area of pricing.
Price Wars, Price Objectives Based on Discounts, Supply, Financial Crises, Price Sensitivity, Hotel Profitability, Hotel Image, Competitive Position, Brand Loyalty, Exit From Market.
- Alonso-Almeida, M. del M., & Bremser, K. (2013). Strategic responses of the Spanish hospitality sector to the financial crisis. International Journal of Hospitality Management, 32, 141-148.
- Ansu, B. T., & Kwarteng, E. (2016). The impact of mobile telecommunication companies. Price War on Consumer Purchasing Behaviour in Ghana, 5(4), 462-468.
- Armstrong, M., Vickers, J., The, S., Journal, R., Winter, N., & Armstrong, M. (2016). Competitive Price Discrimination Published by: Wiley on behalf of RAND Corporation Stable. Retrieved from http://www.jstor.org/stable/2696383 Competitive price discrimination, 32(4), 579-605.
- Arnhold, U. (2010). User generated branding: Integrating user generated content into brand management (1st ed.). Wiesbaden: Springer Gabler.
- Baines, P., & Fill, C. (2014). Marketing (3rd ed.). Oxford: Oxford University Press.
- Berkowitz, E. N., & Hillestad, S. G. (1991). Health care marketing plans: From strategy to action (2nd ed.). Maryland: Aspen Publishers, Inc.
- Bowie, D., & Buttle, F. (2004). Hospitality Marketing. Hospitality Marketing, 231-280. Retrieved from https://doi.org/10.1016/B978-0-08-096791-2.10009-X
- Boz, H., Arslan, A., & Koc, E. (2017). Neuromarketing aspect of tourısm pricing psychology. Tourism Management Perspectives, 23, 119-128.
- Bungert, M. (2003). Termination of price wars: A signaling approach (1st ed.). Heidelberg: Springer Science & Business Media.
- Burnett, J. (2008). Core concepts of marketing. The Global Text Project, Funded by the Jacobs Foundation, Zurich, Switzerland, 234-236.
- Busse, M. (2002). Firm financial condition and airline price wars. RAND Journal of Economics, 33(2), 298-318.
- Cant, M., Strydom, J., Jooste, C., & Plessis, P. (2006). Marketing management (5th ed.). Cape Town: Juta & Co. Ltd.
- Dodds, B. (2003). Managing customer value: Essentials of product quality, customer service, and price decisions (1st ed.). Lanham: University Press of America.
- Doole, I., & Lowe, R. (2008). The official CIM course-book: Strategic marketing decisions 2008-2009 (1st ed.). Oxford: Butterworth-Heinemann.
- Dow, K., Watson, M., Greenberg, P., & Greenberg, R. (2012). Understanding Participation: Situational Participation, Intrinsic Involvement, and Influence. In M. Epstein & J. Lee (Eds.), Advances in Management Accounting (1st ed., pp. 25-48). Bingley: Emerald Group Publishing Limited.
- Dowling, G. (2004). The art and science of marketing: Marketing for marketing managers (1st ed.). Oxford: Oxford University Press.
- Eichengreen, B., & Portes, R. (1987). The Anatomy of Financial Crises. In R. Portes & A. K. Swoboda (Eds.), Threats to International Financial Stability (1st ed., p. 10). Cambridge: Cambridge University Press.
- Elzinga, K. G., & Mills, D. E. (1999). Price wars triggered by entry. International Journal of Industrial Organization, 17(2), 179-198. Retrieved from http://dx.doi.org/10.1016/S0167-7187(97)00037-4
- Enz, C. A. (2010). Hospitality strategic management: Concepts and cases (2nd ed.,). New Jersey: John Wiley & Sons, Inc.
- Fornell, C., & Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50.
- Gazda, J., Bugar, G., Volosin, M., Drotar, P., Horvath, D., & Gazda, V. (2017). Dynamic spectrum leasing and retail pricing using an experimental economy. Computer Networks, 121, 173-184. Retrieved from https://doi.org/10.1016/j.comnet.2017.04.040
- Grundey, D. (2009). Branding strategies during economic crisis: Avoiding the erosion. Economics and Sociology, 2(2), 9-22. Retrieved from https://doi.org/10.14254/2071-789X.2009/2-2/1
- Hair, J., Hult, T., Ringle, C., & Sarstedt, M. (2016). A primer on partial least squares structural equation modeling (PLS-SEM) (2nd ed.). Thousand Oaks: SAGE Publications.
- Hanna, N., & Dodge, R. (1995). Pricing: Policies and procedures (1st ed). London: Macmillan Press Ltd.
- Heerde, H. J. V., Gijsbrechts, E., & Pauwels, K. (2008). Winners and Losers in a Major Price War. Journal of Marketing Research, 45(5), 499-518. Retrieved from http://www.jstor.org/stable/20618839
- Haron, A. J. (2016). International Journal of Economics & Factors Influencing Pricing Decisions, 5(1), 1-4. Retrieved from https://doi.org/10.4172/2162-6359.1000312
- Harvard Business Review on Marketing. (2001) (3rd ed.). Boston: Harvard Business School Publishing Corporation.
- Hassali, M. a., Siang, T. C., Saleem, F., & Aljadhey, H. (2013). A qualitative exploration of perceptions toward pharmaceutical price war among community pharmacists in the state of Penang, Malaysia. Journal of Medical Marketing: Device, Diagnostic and Pharmaceutical Marketing, 13(1), 44-53. Retrieved from https://doi.org/10.1177/1745790413477648
- He, Z., Cheng, T. C. E., Dong, J., & Wang, S. (2016). Evolutionary location and pricing strategies for service merchants in competitive O2O markets. European Journal of Operational Research, 254(2), 595-609. https://doi.org/10.1016/j.ejor.2016.03.030
- Heil, O. P., & Helsen, K. (2001). Toward an understanding of price wars: Their nature and how they erupt. International Journal of Research in Marketing, 18(1-2), 83-98. Retrieved from https://doi.org/10.1016/S0167-8116(01)00033-7
- Helsen, K., & Kotabe, M. (2009). The sage handbook of international marketing (1st ed.). London: SAGE Publications.
- Henry C. Thode. (2002). Testing for normality (1st ed.). New York: Marcel Dekker Inc. Retrieved from https://books.google.com.eg/books?id=gbegXB4SdosC&printsec=frontcover#v=onepage&q&f=false
- Hill, C. W. L., & Jones, G. R. (2013). Strategic management: An integrated approach (10th ed.). Mason: South-Western Cengage Learning.
- Hsu, C. H. C., & Powers, T. (2002). Marketing hospitality (3rd ed.). NewYork: John Wiley & Sons, Inc.
- Hu, Y., & Tang, M. (2014). Game theory analysis of e-commerce’s price war. iBusiness, 6, 189-194.
- Indounas, K., & Roth, S. (2012). Antecedents and consequences of strategic price management: An analysis in the New Zealand industrial service context. Australasian Marketing Journal, 20(2), 113-121. https://doi.org/10.1016/j.ausmj.2011.10.006
- Jain, S. C. (2000). Marketing planning & strategy (6th ed.). Cincinnati: South-Western College Pub.
- Kamaruddin, K., & Abeysekera, I. (2013). Intellectual capital and public sector performance (1st ed.). Bingley: Emerlad Group Publishing Limited.
- Keengwe, J. (2015). Handbook of Research on Educational Technology Integration and Active Learning. (J. Keengwe, Ed.) (1st ed.). Hershey.
- Kim, M., Lee, S. K., & Roehl, W. S. (2016). The effect of idiosyncratic price movements on short- and long-run performance of hotels. International Journal of Hospitality Management, 56, 78-86. Retrieved from https://doi.org/10.1016/j.ijhm.2016.04.006
- Kim, Y. (2010). Competitive dynamics and strategic pricing decisions: Observations from the lodging industry. The Pennsylvania State University.
- Klemperer, P. (1989). Price wars caused by switching costs. The Review of Economic Studies. Retrieved from https://doi.org/10.2307/2297555
- Kopalle, P., Biswas, D., Chintagunta, P. K., Fan, J., Pauwels, K., Ratchford, B. T., & Sills, J. A. (2009). Retailer pricing and competitive effects. Journal of Retailing, 85(1), 56-70. Retrieved from https://doi.org/10.1016/j.jretai.2008.11.005
- Kotabe, M., & Helsen, K. (2010). Global marketing management (5th ed.). Hoboken: Johnwiley& Sons, Inc.
- Kotler, P. (2000). Marketing Management, Millenium Edition. Marketing Management, 23(6), 230. Retrieved from https://doi.org/10.1016/0024-6301(90)90145-T
- Kotler, P., Bowen, J. T., & Makens, J. C. (2006). Marketing for hospitality and tourism. Current Issues in Tourism (4th ed.). New Jersey: Pearson Education Ltd. Retrieved from https://doi.org/10.1108/09670730610690358
- Kovacevic, N., Abdi, H., & Beaton, D. (2013). Revisiting PLS Resampling: Comparing Significance Versus Reliability Across Range of Simulations. In H. Abdi, W. Chin, V. E. Vinzi, G. Russolillo, & L. Trinchera (Eds.), New Perspectives in Partial Least Squares and Related Methods (1st ed., pp. 159-170). New York: Springer Science & Business Media.
- Kramer, A., Jung, M., & Burgartz, T. (2016). A small step from price competition to price war: Understanding causes, effects and possible countermeasures. International Business Research, 9(3), 1. Retrieved from https://doi.org/10.5539/ibr.v9n3p1
- Kumar, A., & Meenakshi, N. (2011). Marketing management (2nd ed.). New Delhi: Vikas Publishing House Pvt Ltd.
- Lee, S. K. (2015). Quality differentiation and conditional spatial price competition among hotels. Tourism Management, 46, 114-122.
- Lindstadt, H., & Dietl, P. (2010). Collapsing Demand : Can a Price War Be Avoided ?. Retrieved from 1-5. https://doi.org/https://www.ibu.kit.edu/rd_download/QISM_1Q2010_-_Collapsing_Demand.pdf
- Londhe, B. (2006). Retail and distribution management (1st ed.). Mandir Lane: Nirali Prakashan.
- Mar-Molinero, C., Menendez-Plans, C., & Orgaz-Guerrero, N. (2017). Has the 2008 financial crisis changed the factors determining the systematic risk of shares in the “European Hospitality Industry”? (2003-2013). Journal of Hospitality and Tourism Management, 31, 59-69.
- Marn, M., Roegner, E., & Zawada, C. (2004). The price advantage (1st ed.). Hoboken: John Wiley & Sons, Inc.
- Merriam-Webster. (2016). Retrieved from https://www.merriam-webster.com/dictionary/price war
- Morrison, S. A., & Winston, C. (1996). Causes and Consequences of airline fare wars. The Airline Business is the Closest Thing There is to Legalized Warfare, 1996(1996), 85-131. Retrieved from http://www.jstor.org/stable/2534747
- Preacher, K., & Hayes, A. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior Research Methods, 40(3), 879-891.
- Reyes-Mercado, P. (2016). Eco-innovations in emerging markets: Analyzing consumer behaviour and adaptability (1st ed.). London: Palgrave Macmillan.
- Rowley, J. (1997). Principles of price and pricing policy for the information marketplace. Library Review, 46(3), 179-189.
- Salman, D., Tawfik, Y., Samy, M., & Artal-Tur, A. (2017). A new marketing mix model to rescue the hospitality industry: Evidence from Egypt after the arab spring. Future Business Journal, 3, 47-69.
- Silva, R. (2015). Multimarket contact, differentiation, and prices of chain hotels. Tourism Management, 48, 305-315.
- Slade, M. E. (1989). Price wars in price-setting supergames. Economica, London School of Economics and Political Science, 56(223), 295-310.
- Smith, T. J. (2012). Pricing strategy: Setting price levels, managing price discounts and establishing price structures (1st ed.). Mason: South-Western Cengage Learning.
- Spulber, D. (2009). Economics and management of competitive strategy (1st ed.). toh tuck link: World Scientific Publishing Co. Pte. Ltd.
- Teo, T., Tsai, L., & Yang, C.-C. (2013). Applying Structural Equation Modeling (SEM) in Educational Research: An Introduction. In M. Swe (Ed.), Application of Structural Equation Modeling in Educational Research and Practice (1st ed., pp. 11-12). Rotterdam: Sense Publishers.
- Viglia, G., Mauri, A., & Carricano, M. (2016). The exploration of hotel reference prices under dynamic pricing scenarios and different forms of competition. International Journal of Hospitality Management, 52, 46-55. Retrieved from https://doi.org/10.1016/j.ijhm.2015.09.010
- Willie, P., Pirani, A., Jayawardena, C. (Chandi), Sovani, A., & Davoodi, R. (2013). Trends in hotel investment and financial management in Canada. Worldwide Hospitality and Tourism Themes, 5(2), 190-204.
- Wooldridge, J. (2009). Introductory econometrics: A modern approach (4th ed.). Mason: South-Western Cengage Learning.
- Wunderlich, P. (2013). Green information systems in the residential sector: An examination of the determinants of smart meter adoption (1st ed.). New York: Springer.
- Yannopoulos, P. (2011). Defensive and offensive strategies for market success. International Journal of Business and Social Science, 2(13), 1-12. Retrieved from http://www.ijbssnet.com/journals/Vol._2_No._13_Special_Issue_July_2011/1.pdf
- Zeithmal, V., & Bitner, M. (2003). Services marketing: Integrated customer focus across the frim (3rd ed.). New York: McGraw-Hill Higher Education.
- Zhang, Y., & Round, D. K. (2011). Price wars and price collusion in China’s airline markets. International Journal of Industrial Organization, 29(4), 361-372. Retrieved from https://doi.org/10.1016/j.ijindorg.2010.07.005
Abstract Views: 92
PDF Views: 0