Is brand alliance always beneficial to firms?

Ruiliang Yan and Zixia Cao

Journal of Retailing and Consumer Services, 2017, vol. 34, issue C, 193-200

Abstract: In this research, we develop a fresh analytical model to examine the impact of brand quality on the firms’ performances when two firms selling substitute products form a brand alliance. Our results indicate that when two products have equal brand qualities, brand alliance is always a beneficial strategy for two firms to employ. However, when two products have different brand qualities, brand quality differential shows a positive relationship with the profit of the firm with the low-quality brand but demonstrates a negative relationship with the profit of the firm with the high-quality brand in the brand alliance. Our results also show that brand quality differential has a greater effect on the profit of the firm with the high-quality brand than on that of the firm with the low-quality brand. In addition, we find that brand alliance becomes much more valuable to the firm with the high-quality brand when the brand quality differential decreases, but the value of brand alliance has a concave relationship with the profit of the firm with the low-quality brand when the brand quality differential increases.

Keywords: Marketing strategy; Brand alliance; Brand quality; Interfirm cooperation; Analytical modeling (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joreco:v:34:y:2017:i:c:p:193-200

DOI: 10.1016/j.jretconser.2016.10.009

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