Selling When Brand Image Matters
Journal
Journal of Institutional and Theoretical Economics
ISSN
0932-4569
ISSN-Digital
1614-0559
Type
journal article
Date Issued
2011-03-01
Author(s)
Höffler, Felix
Abstract (De)
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 "active branding" 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
"passive branding" 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
image affects demand. We consider a seller facing a population
of consumers with heterogeneous tastes regarding product quality and brand image. First, we analyze "active branding" 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
"passive branding" 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
Language
German
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Mohr Siebeck
Publisher place
Tübingen
Volume
167
Number
1
Start page
119
End page
121
Pages
3
Subject(s)
Eprints ID
81952