Tracking time-varying brand equity using household panel data

Abstract

This paper proposes a novel yet simple approach for tracking time-varying utility-based brand equity using household panel data. Our two-stage procedure allows us to estimate a discrete choice model that explicitly accounts for consumer heterogeneity, state dependence, price endogeneity, and dynamic brand equity. We present dynamic brand utility as a time-varying measure that adds to current market-based or mindset metrics. An empirical study of household purchases in the detergent category reveals that brand equity varies over time. The temporal changes in the brand equity of single brands and the differences across brands have significant implications for consumers’ brand choice and, consequently, for brand management. Therefore, the dynamic utility-based model offers valuable support for tracking a brand’s state, including the brand’s competition, and for making appropriate marketing decisions.