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Article Summary The article Flanking in a Price War discusses a pricing experiment that was conducted in the Quebec grocery industry The experiment was initiated by a grocery chain in Quebec that was concerned about a possible price war between the major players in the market Given in the article is a background of the Quebec grocery industry and its typical pricing strategies and marketing theory It also discusses the different ways to look at pricing tactics other than the traditional price slashing that had happened before The experiment looks at other ways to categorize products that may react differently to pricing changes The Bayesian theory of using the knowledge of prior events to predict future events in implemented in executing the results of the experiment The article first focuses on the Steinberg grocery chain In the late 80s Steinberg needed to increase their market share It was expected that they would lower their prices and start a price war like they have in the past IGA- Boni one of the four major players in the Quebec grocery industry was concerned over this possibility as they would need to react to any price changes to keep their market share but doing so would cause large profit losses The president of IGA-Boni called upon university staff in both Canada and the United States to come up with an alternative game plan They came up with the following experiment Pricing Experiment Design Previous to this experiment it was generally thought that price inversely affects quantity sold A very important proposal in this experiment suggests that there are different price strategies for different types of products Specifically in this case stock up and non-stock up goods Stock up goods are usually non-perishables items ie canned goods soap or goods that come in large convenient sizes The non-stock up goods would be the perishable goods like fresh vegetables or milk and
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