Measures of Brand Loyalty

William J. Allender and Timothy Richards

No 49536, 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin from Agricultural and Applied Economics Association

Abstract: Though brand loyalty has been studied extensively in the marketing literature, the relationship between brand loyalty and equilibrium pricing strategies is not well understood. Designing sales pricing strategies involves two key decisions: the percentage reduction in price from the existing price point, and the number or frequency of promotions within a category or for a specific product. These decisions, in turn, are critically dependent upon how many consumers can be convinced to switch to a brand by temporarily reducing its price, and how many are instead brand loyal. Theoretical models of how the size and strength of brand loyalty influence optimal promotion strategies have been developed, but there are no rigorous tests of their hypotheses. We test how brand loyalty impacts promotion strategies for a frequently purchased consumer package good category. Our results largely confirm that retailers often promote many brands simultaneously and that depth and breadth can be complementary.

Keywords: Consumer/Household Economics; Food Consumption/Nutrition/Food Safety; Marketing (search for similar items in EconPapers)
Pages: 41
Date: 2009
New Economics Papers: this item is included in nep-agr, nep-ind and nep-mkt
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea09:49536

DOI: 10.22004/ag.econ.49536

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