Selling when Brand Image Matters
Year: 2011
Type: article
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 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 populations 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)
Authors: Stefan Buehler, Daniel Halbheer
Institutions: University of St.Gallen, University of Zurich
Language: English
Subfield: Marketing
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2148148176