A company is more likely to involve in activities of the product line as the competitors change their line of production in the past, and when the company is large with high pricing strategies (Shankar, 2006). The reaction and anticipation of elasticity of product line appear to be asymmetric between themselves from one firm to another. According to the market leaders or followers, the reaction of an elasticity of a product line is higher or lower than the anticipated elasticity of the product line. Therefore, these variances usually relate to the elasticity demand of product lines. That is the elasticity of demand for the product line is higher as in the case of market leaders more than they are for the market followers.
The actions of a company regarding its product line and other marketing variables are determined by two key competitive components such as reactive actions that rely on the past actions of the company's competitors. The second determinant is the proactive actions that are centered on the anticipated behaviors of the firm's competitor. However, the determinants of these product line actions are based on the firm factors such as the size of the firm and the market factors such as the size of the market, and the growth of the market. Similarly, the degree of the product line action is at 9.2%.
It implies that if the product line of the market leaders is increased by 10%, then HP will experience an expansion in its product line by 9.2%. However, this change will affect the distribution intensity of HP. Therefore, the action of a company’s product line can be decomposed to form reactions and anticipation elasticity through the provision of insights into the elements that determines the actions such as the prior roles and the anticipated actions of the competitor regarding the product line actions. Moreover, the actions of product lines and elasticity are asymmetric because the market leaders are adopting hybrid strategies that is more complex (Sudhir, 2001). Consequently, it does not fight for prices whereas the market followers are practicing a fight pricing strategy.
References
Shankar, V. (2006). Proactive and Reactive Product line Strategies. Asymmetries between Market Leaders and Followers, 52(2).
Sudhir, K. (2001). Competitive Pricing Behavior in the Auto Market. A structural Analysis, 1(1).
