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Selling When Brand Image Matters

Stefan Bühler () and Daniel Halbheer ()
Authors registered in the RePEc Author Service: Stefan Buehler ()

University of St. Gallen Department of Economics working paper series 2010 from Department of Economics, University of St. Gallen

Abstract: This paper studies profit-maximizing seller behavior when brand image affects consumer 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 population’s consumption of the product. We demonstrate that seller profits increase in the average degree of conformity in the opulation whereas the price remains unaffected.

Keywords: Quality; brand image; advertising; conformity; exclusivity (search for similar items in EconPapers)
JEL-codes: D42 L15 L21 M37 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2010-05
New Economics Papers: this item is included in nep-com and nep-mkt
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Citations: View citations in EconPapers (2) Track citations by RSS feed

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Journal Article: Selling when Brand Image Matters (2011) Downloads
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