Published by MBA Skool Team, Last Updated: May 12, 2013
What is Multi-Market Strategy?
Firms adopting multi-marketing strategy compete with each other in several distinct geographical markets. Such firms carefully avoid other firms serving the entire market with differentiated products. Multimarket competition has intensified with globalization.
Multi-market strategy has 2 main consequences:
New Product Introductions
Multimarket competitions increases inter-firm rivalries. The intensity of this rivalry can be measured by the number of overlapping geographic-product markets (market domains). If a firm operates 2 products in 2 different markets, then it has 4 geographic-product markets. The intensity of competition is reflected in aggressive price changes and new product introductions. A concept called mutual forbearance can dampen the competition among such firms. It occurs when the 2 firms understand each other’s motives and then coordinate implicitly to reduce competition.
For example, Multi market strategy can be viewed in the airline industry. A US based regional airline, America West provided low cost introductory offers for flights from Houston, Texas etc. Continental Airlines reacted to this by lowering air fares for flights out of Phoenix, Arizona etc which was America’s West hub and the dominant market.
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