Authors: John N. Angelis, Moren Levesque
Addresses: Rochester Institute of Technology, E. Philip Saunders College of Business, 105 Lomb Memorial Drive, Rochester, NY 14623-5608, USA. ' University of Waterloo, Department of Management Sciences and CBET, 200 University Avenue West, Waterloo, Ontario, N2L 3G1, Canada
Abstract: Just as their established counterparts do, new ventures that pioneer nascent industries strive to increase profit by acquiring the sales of rival new ventures. However, these new ventures can also grow by attracting unrealised sales to their nascent industry. This article investigates the resulting trade-off in marketing expenditures when new ventures compete. Extensive numerical analysis on a multi-period framework suggests that an increase in a new venture|s unit profit margin, effectiveness in gaining new sales or initial sales level, but a decrease in sales decay, may cause a positive spill-over for its rival. The numerical analysis also indicates when a new venture should target its rival|s sales rather than focusing on growth through unrealised sales. This research thus provides guidance to new ventures searching for a marketing balance between growing their industry and competing on market share.
Keywords: new venture growth; optimal marketing strategies; entrepreneurship; competition; differential games; game theory; new business ventures; entrepreneurial marketing; nascent industries; marketing expenditure; multi-period frameworks; profit margins; sales growth; numerical analysis; innovation management.
International Journal of Entrepreneurship and Innovation Management, 2010 Vol.11 No.1, pp.109 - 135
Available online: 02 Dec 2009 *Full-text access for editors Access for subscribers Purchase this article Comment on this article