دانلود رایگان مقاله انگلیسی پیامدهای ناشی از تعامل برند برای قیمت گذاری چند محصول - اشپرینگر 2017

Abstract

This paper explores and quantifies the importance of parent brand state dependence to forward looking pricing outcomes in the area of umbrella branding and multi-product firms. We show through numerical simulations that loyalty (inertia) to the parent brand can decrease prices and reduce profits, as well as mitigate or even reverse the benefits of joint profit maximization relative to sub-brand profit maximization. These effects are mediated by brand asymmetries and the relative magnitude of sub-brand state dependence effects. Empirically, we focus on the Yogurt category, where we consider parent brands with several sub-brands. Using household level scanner data, we estimate the parameters that characterize consumer demand while flexibly accounting for consumer heterogeneity. We also estimate unobserved product costs based on a forward looking price setting game. Through counterfactual analysis, we study the overall effect of parent brand state dependence on prices and profits, as well as the empirical impact of joint profit maximization and changes in firms’ beliefs regarding consumer inertia. Our findings have implications for markets where demand is likely characterized by parent brand dynamics.

6 Conclusion

There is increasing academic interest in the long term impact of marketing policies and the perils of myopic behavior on the part of managers and decision makers. In this work, we take a forward looking perspective on the pricing decision of multiproduct firms and examine the effect of demand choice dynamics that reflect consumers’ tendency to stay loyal to a firm when choosing between multiple sub-brands of a broader umbrella brand. We examine a product category, refrigerated yogurt, where consumers’ choices depend not only on past choices of specific product alternatives but also on past choices of the parent brands. Such cross-sub-brand state dependence, for repeatedly purchased goods, generates meaningful dynamics with non-trivial implications for equilibrium prices and profitability.

Our numerical simulations reveal that state dependence to the parent brand can decrease prices and reduce profits, as well as mitigate or even reverse the benefits of joint profit maximization relative to sub-brand profit maximization. Our empirical analysis establishes the real world relevance of parent brand state dependence and confirms that moderate levels of inertia lead to both lower prices and reduced profits, though these effects are mediated and can be even reversed by asymmetries in the market positions of brands and the relative importance of sub-brand state dependence. In the yogurt category, joint profit maximization leads to higher prices and profits, relative to sub-brand profit maximization, but firms could benefit from being unaware of (or ignoring) consumer inertia as long as they all behaved similarly. If only one firm deviated towards “unawareness”, it would do so at its peril. Expressed differently, in a “naive” market, there are profitable deviations to becoming more sophisticated.