Consumer Brand Preferences Research Articles

Strategies for building consumer brand preference

The marketer’s principal objective is typically to build a relationship with buyers, rather than merely to make a single sale. Ideally, the essence of that relationship consists of a strong bond between the buyer and the brand. Outlines six strategies for building that relationship: linking the brand to a particular need; associating it with a pleasant mood; appealing to subconscious motives; conditioning buyers to prefer the brand through reward; penetrating perceptual and cognitive barriers to create preference; and providing attractive models for buyers to emulate. The choice of an individual strategy or combination depends mainly on the nature of the branded product or service. The success of the strategy depends heavily on the marketer’s understanding of the preference building and bonding process.

Similarities in Choice Behavior Across Product Categories

Differences between consumers in sensitivity to marketing mix variables have been extensively documented in the scanner panel data. All studies of consumer heterogeneity focus on a specific category of products and ignore the fact that the purchase behavior of panel households is often observed simultaneously in multiple categories. If sensitivity to marketing mix variables is a common consumer trait, then one should expect to see similarities in sensitivity across multiple categories. The goal in this paper is to measure the covariance of both observed (linked to measured characteristics of households) and unobserved heterogeneity in marketing mix sensitivity across multiple categories. Measurement of correlation in sensitivities across categories will serve to guide the interpretation of the literature on household heterogeneity. If there is a large correlation, one can be more confident that sensitivity to marketing variables is a fundamental household property and not simply a category-specific anomaly. Detection of correlation in sensitivities across categories requires an appropriate methodology that can handle the high dimensional covariance structures and properly account for uncertainty in estimation. For example, a simple approach might be to fit a brand choice model to each of the available categories in turn, ignoring the data in the other categories. For each category, household parameter estimates could be obtained for the parameters corresponding to price, display, and feature sensitivity. These parameter estimates could be viewed as data and the correlations across categories could be computed. Such a procedure could induce a downward bias in the estimation of correlation due to the independent sampling errors, which are present in each parameter estimate. We develop a hierarchical model structure that introduces an explicit correlation structure across categories and utilizes the data in multiple categories at the same time. To reduce the size of the covariance matrix, we use a variance components approach. We introduce household-specific demographic variables to decompose the correlation across categories into that which can be ascribed to observable and unobservable sources. Shopping behavior variables such as shopping frequency and market basket size as well as intensity of shopping in a category are also included in the model. Using data on five categories, we find substantial and statistically important correlations ranging from .32 for price sensitivities to .58 for feature sensitivity. These correlations are much larger than the correlations obtained with the state-of-the-art techniques available prior to our work. We attribute our ability to detect substantial correlations to our method, which involves the joint use of multiple category data in a parsimonious and efficient manner. Unlike previous studies with panel data, household demographic variables are found to be strongly related to price sensitivity. Higher income households are less price sensitive and large families are more price sensitive. Shopping behavior variables are also important in explaining price sensitivity. Households that visit the store often are more price sensitive. Households with larger market baskets are less price sensitive, confirming the view of Bell and Lattin (1998). Heavy user households tend to be both less price sensitive and less display sensitive. The evidence presented here of substantial correlations validates, in part, the notion that sensitivity to marketing mix variables is a consumer trait and is not unique to specific product categories. It also opens the possibility of using information across categories in making inferences about consumer brand preference and marketing mix sensitivity, providing a richer source of information for target marketing.

Market share and price determination in the contemporary airline industry

This paper examines airline pricing and market structure determination for domestic airport-pair routes. The model includes variables to control for the effects of congestion, consumer brand preferences, barriers to entry into airports, and multiple airport availability within a city. The results indicate the noncontestability of airline markets, but certain factors can mitigate a carrier's endpoint dominance. Additionally, the need for policies addressing airport congestion is indicated by several aspects of model results.

The equalization price: A measure of consumer-perceived brand equity

Building upon the ideas of information economics and market signalling theory, a formal conceptual framework for explaining the creation, management, transfer and measurement of brand equity has been proposed by Erdem and Louviere. The research presented in this paper is a first step in the operationalization of that framework by developing a method for the measurement of brand equity that is built upon a theory of consumer behavior. Specifically, designed choice experiments that account for brand name, product attributes, brand image and consumer heterogeneity effects are proposed as the method for quantifying a brand equity measure called the Equalization Price (EP). Given an existing market structure, brand images built over time by advertising and product experiences, consumer brand perceptions and preferences, EP is a measure of the implicit value to the individual consumer of the brand in a market in which some degree of differentiation exists vis-à-vis its implicit value in a market characterized by no brand differentiation. The proposed measure can be used for both existing products and proposed brand name extensions, so it can double as a product-concept screening tool. We illustrate the application of the method for measuring brand equity using a convenience sample of Canadian consumers. In each of three product classes (deodorants, jeans and athletic shoes) we defined five existing products and two brand name extensions; these were presented to the respondents in designed choice sets which systematically varied prices over a range actually found in the local market. Concurrently, information related to brand image, previous brand usage and consumer sociodemographic characteristics was collected. The consumer choice data were used to calibrate Multinominal Logit choice models, from which we derive EP estimates for our sample. We discuss the interpretation of the modelling results for our data, illustrating the types of managerially relevant information about brand equity and its transfer that can be obtained from the method.

Individual differences in response to consumer promotions

This research hypothesizes important individual differences in response to promotions and tests for them using a cross-sectional multinomial logit choice model. Our hypotheses suggest interactions between individual brand preference and the effects of current promotion and past promotional purchase. To test for these interactions, we introduce a new method of measuring brand preference from past purchase data. The new method seeks to incorporate competitive purchase conditions as modifiers to observed brand purchase behavior in estimating consumer brand preference. We account for heterogeneity in the cross-sectional model by using two measures of loyalty: one to capture differences across individuals and one to capture the time-varying changes within an individual. Our empirical results, based on scanner panel data for instant caffeinated coffee, support our hypotheses and our model specification. We conclude that accounting for consumer heterogeneity both in response to promotion and in brand and size loyalty improves both fit and predictive ability.

An Empirical Analysis of the Relationship Between Brand Loyalty and Consumer Price Elasticity

This empirical paper explores the relationship between consumer brand preference or loyalty and price elasticity in purchase behavior. This behavior is conceptualized as resulting from two distinct but related decisions, namely a brand choice decision and a purchase quantity decision. We argue that loyal consumers will be less price sensitive in the choice decision than nonloyal consumers. However, this direction is expected to be reversed in the quantity decision with loyal consumers expected to be more price sensitive than nonloyal consumers. We model the choice and quantity decisions jointly using the limited dependent variable framework described in Krishnamurthi and Raj. The data used are diary panel data on a frequently purchased product class from BURKE and caffeinated ground coffee scanner data from IRI. We show that loyals are less price sensitive than nonloyals in the choice decision but more price sensitive in the quantity decision. Managerial implications of the differing elasticities are discussed.

Persuasion or Information? Promotion and the Shares of Brand Name and Generic Pharmaceuticals

ECONOMISTS have vigorously debated whether advertising and other messages supplied by sellers to buyers represent the efficient provision of information or the exploitation of buyers' imperfect access to it. Many economists now agree that each view commands some truth. Advertising should convey information efficiently where the buyer can easily verify it. But it may engender inefficient rent-seeking outlays by producers able to hamper buyers' gaining of information from alternative sources. For example, if buyers sample product information randomly, an incumbent can "jam" the channels through which entrants transmit their messages by loading the sampled population with messages of his own. Or the incumbent's messages can reinforce buyers' habits so as to reduce their prior expectations of the value of trying an alternative brand.2 If sales promotion is effective (by whatever means) in causing buyers to shift among competing products, it becomes a form of rent-seeking outlay by which sellers bid for the available customers.3 The problem for empirical research is to determine the extent to which seller-supplied information pursues a rent-seeking goal and thus incurs social costs. Those costs must be set against the efficiency advantage of sellers (relative to buyers or

Comments on "Econometric Models for Probabilistic Choice Among Products"

McFadden's exposition (this issue) on the models of probabilistic choice and how they relate to consumer behavior in economic markets is a commendable piece of work which is attuned to the spirit and theme of this conference. Consumer behavior is clearly an area that is of interest to both the marketeer and economist alike, but the economists, long regarded as outspoken guardians of the truth in such matters, have been uncharacteristically silent when it comes to the practical problem of translating economic theory and implications into useful marketing strategies. As a result, the marketing profession has more or less been bogged down in a quagmire of pseudoscientific, ad hoc theories of consumer behavior, searching for a meaningful paradigm in which to analyze the brand preferences of consumers. Perhaps the best illustration of this has been the contagious application of the so-called attitudinal-belief models of consumer behavior inspired by the studies of Rosenberg (1956) and Fishbein (1967a, 1967b). In any case, the probabilistic choice models described by McFadden provide an excellent starting point for the analysis of consumer behavior that should be acceptable and conceptually pleasing to members of both professions. In its simplest form, the theory of random choice postulates that each member of a population of utility-maximizing consumers possesses a utility function U(s,x) = v(sx) + e(sx), where s is a vector of individual attributes, x is a vector of product attributes, v is a nonstochastic function reflecting representative tastes, and e is a function that varies randomly in the population. Assuming that the choice set of interest is B = (XI, X2, . . . , xj) and that e values are independently and identically distributed over B with the extreme value distribution, we can derive for the probability that an individual drawn at random from the population will choose x the expression

An Analysis of Retail Display Space: Theory and Methods

The growth of self-service retailing during the post-World War II period coincident with the proliferation of new products has encouraged retail management to be increasingly sensitive to the opportunity costs of their relatively scarce display areas. Many retail stores have experienced a rapid increase in the number of new items stocked and a decline in the average selling space devoted to specific goods. In supermarkets, for example, the number of items stocked per square foot of selling space increased from 0.380 in 1956 to 0.545 in 1965 (Supermarket Institute 1965). The significance of product display area in self-service stores stems from the importance of physical product exposure as a sales stimulus. Most retail stores employ product displays to attract the attention of potential buyers and stimulate their demand for goods. This strategic role of shelf space in merchandising has caused one author, Cairns (1962), to define the retailer as a merchant of product display area. Given the importance of display exposure as a stimulator of sales, and hence the pressure from manufacturers for more of it, it has become necessary to develop statistical methods which would enable retail management to evaluate the profitability of alternative shelf-space assignments. One of the most significant short-run decisions of retail management is to assemble a portfolio of product brands and determine the shares of display area which should be assigned to each. This paper develops a theoretical model of the relationship between brand market shares and share of product display space, given a profile of consumer brand preferences. An empirical measure of market-share elasticity, suggested by the theory, is statistically evaluated using experimental data. These developments are used as part of an integrated theory of the profit-maximizing allocation of product display space.

The Measurement of Buyer Brand Preference and Indifference Under Changing Terms of Trade

AbstractA model first suggested by Padberg, Walker, and Kepner has been employed in this paper to evaluate the impact of changes in the retail terms of trade on the magnitude and composition of consumer brand preferences.

An Attitude Model for the Study of Brand Preference

his characteristics is a prelude to identifying the causes of preference and the means by which it can be influenced. This study of consumer brand preference was an application of a model of consumer attitudes; the basic hypothesis was that measures specific to the preference alternatives, rather than more general measures such as those of socioeconomic and personality characteristics, would lead to successful predictions. While the approach is intuitively appealing and seemingly obvious, this study is the first to publicly present results from testing the hypothesis.

Habit Formation and Dynamic Demand Functions

Most economists would agree that past consumption patterns are an important determinant of present consumption patterns, and that one ought to distinguish between long-run and short-run demand functions. But although the distinction between long-run and short-run behavior is traditional in the theory of the firm, it is seldom made in the theory of consumer behavior. If we regard demand theory as a theory of how a given amount of money (expenditure, called income) is allocated among goods, then-in a world without consumer durables-there are three reasons why longand shortrun demand functions might differ. (i) The consumer may have contractually fixed commitments which prevent him from adjusting some portion of his consumption (for example, housing) in response to changes in prices or income. When these fixed commitments lapse, he is able to adjust to his long-run equilibrium. (ii) The consumer may be ignorant of consumption possibilities or of his own tastes outside the range of his past consumption experience. In this case his adjustment to a new price-income situation will involve a time-consuming learning process. (iii) Finally, goods may be "habit forming" so that an individual's current preferences depend on his past consumption patterns. In this case a change in prices or income will cause a change-in consumption which will induce a change in tastes, which will cause a further change in consumption. In this paper I formulate a model of consumer behavior based on habit formation, beginning with a specific class of demand functions derived from the "modified Bergson family" of utility functions. The properties of these utility functions and the corresponding demand functions are briefly summarized in Section 1. I then postulate that the parameters

Effects of Group Influences on Consumer Brand Preferences

Effects of Group Influences on Consumer Brand Preferences

Effects of Group Influences on Consumer Brand Preferences

The exploratory study reported here attempts to identify if and how informal social groups influence the brand preferences of their members. The results suggest, first, that consumers are influenced by such groups and second, that the extent and degree of brand loyalty behavior within a group is more closely related to the behavior of the informal leader than to the cohesiveness of the group.

Antitrust: Consumer Brand Preferences and "Like Grade and Quality" under Robinson-Patman Act

Antitrust: Consumer Brand Preferences and "Like Grade and Quality" under Robinson-Patman Act