An encompassing viewon markdown pricing strategies: an analysisof the Austrian mobile phone market

Fierce competition and rapid technological progress have considerablyreduced the life cycle length for mobile phones in the last decade. Once a newmobile phone is launched, providers on the market under consideration practice amarkdown strategy. Profits of the providers are generated mainly via the monthly(base plus variable) fees accruing during contract duration whereas the mobilephones are over large parts of their life cycle sold below the constant purchase pricecharged by the OEM supplier. The problem of applying such markdown strategieshas recently been further emphasized by an increased competition among theproviders cutting back revenues generated by the contracts. Although providersfrequently complain about this situation of pre- and cross financing the mobilephones, none of them has yet risked stopping the practiced markdown pricingstrategies.[...]