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Selling when brand image matters


Buehler, Stefan; Halbheer, Daniel (2011). Selling when brand image matters. Journal of Institutional and Theoretical Economics JITE, 167(1):102-118.

Abstract

This paper studies profit-maximizing seller behavior when brand image affects demand. We consider a seller facing a population of consumers with heterogeneous tastes regarding product quality and brand image. First, we analyze<I> active branding</I> by the seller through costly advertising. Our analysis shows that advertising, price, and profits are all increasing in the average valuation of brand image in the population. Second, we examine the role of<I> passive branding</I> emanating from the population's consumption of the product. We find that seller profits increase in the average degree of conformity in the population, whereas the price remains unaffected. (JEL: D42, L15, L21, M37)

Abstract

This paper studies profit-maximizing seller behavior when brand image affects demand. We consider a seller facing a population of consumers with heterogeneous tastes regarding product quality and brand image. First, we analyze<I> active branding</I> by the seller through costly advertising. Our analysis shows that advertising, price, and profits are all increasing in the average valuation of brand image in the population. Second, we examine the role of<I> passive branding</I> emanating from the population's consumption of the product. We find that seller profits increase in the average degree of conformity in the population, whereas the price remains unaffected. (JEL: D42, L15, L21, M37)

Citations

5 citations in Web of Science®
4 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:2011
Deposited On:20 Feb 2012 16:09
Last Modified:05 Apr 2016 15:25
Publisher:Mohr Siebeck
ISSN:0932-4569
Free access at:Related URL. An embargo period may apply.
Publisher DOI:https://doi.org/10.1628/093245611794656598
Related URLs:http://ssrn.com/abstract=1924683
Other Identification Number:merlin-id:4160

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