Is the Simple Price Premium that Simple?

Shi Yuying ()
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Shi Yuying: Marketing and Business Analytics, Texas A & M University - Commerce, Commerce, USA

Review of Marketing Science, 2019, vol. 16, issue 1, 25-47

Abstract: Brand equity has been a perennial topic in marketing. Among all types of measures, price premium is widely accepted due to its simple yet efficient characteristics. However, there is some disagreement regarding whether this measure captures enough facets of brand equity and whether price premium is an appropriate measure to reflect the market position of a brand. With current technique developments, more sophisticated brand equity measures have been developed. A natural question arises as to whether more sophisticated measures are better than price premium. Using large-scale national scanner data covering 47 major U.S. markets, we employ the aggregated demand model to estimate a complex brand equity measure and compare it with price premium. Our results suggest that the simple price premium is consistent with the complex measure under certain conditions. We provide managers with suggestions regarding choosing the most appropriate brand equity measures to signify their brands’ values.

Keywords: brand equity; choice modeling; aggregate demand model; price premium; retailing (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1515/roms-2018-0009

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