Vertical Product Differentiation in Theory and Practice

Eales James and Binkley James K
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Eales James: Purdue University, West Lafayette, Indiana, USA
Binkley James K: Purdue University, West Lafayette, Indiana, USA

Journal of Agricultural & Food Industrial Organization, 2003, vol. 1, issue 1, 18

Abstract: This study examines the role of advertising on consumers' quality perception as a method to vertically differentiate in the baking mix market. Two companies, General Mills and Chelsea Mills have competed head to head since 1930s, using drastically different strategies. General Mills has consistently promoted Bisquick and provided recipes for its use. Chelsea Mills has never advertised its product, Jiffy, preferring instead to minimize cost and provide service to retailers. Both strategies have been successful, resulting in an equilibrium resembling theoretical vertical differentiation models.

Keywords: vertical differentiation; non-price competition; advertising (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (5)

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DOI: 10.2202/1542-0485.1026

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