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Measuring Brand Value in an Equilibrium Framework

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  • Avi Goldfarb

    ()
    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

  • Qiang Lu

    ()
    (Faculty of Economics and Business, University of Sydney, Sydney, NSW2006 Australia)

  • Sridhar Moorthy

    ()
    (Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada)

Abstract

We propose a structural approach to measuring brand and subbrand value using observational data. Brand value is defined as the difference in equilibrium profit between the brand in question and its counterfactual unbranded equivalent on search attributes. Our model allows us to make this computation rigorously, taking into account competitors' and retailers' reactions in the real and counterfactual situations. We illustrate our method using quarterly city-level data on ready-to-eat breakfast cereals, and compare our brand value estimates with those obtained from previously used reduced-form methods. A key advantage of our methodology is that it provides estimates of the value of brands to firms—manufacturers and retailers—taking into account the brand's value to consumers as well as its impact on firm decisions.

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File URL: http://dx.doi.org/10.1287/mksc.1080.0376
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Bibliographic Info

Article provided by INFORMS in its journal Marketing Science.

Volume (Year): 28 (2009)
Issue (Month): 1 (01-02)
Pages: 69-86

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Handle: RePEc:inm:ormksc:v:28:y:2009:i:1:p:69-86

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Related research

Keywords: branding; brand equity measurement; new empirical industrial organization;

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Cited by:
  1. Jiang, Renna & Manchanda, Puneet & Rossi, Peter E., 2009. "Bayesian analysis of random coefficient logit models using aggregate data," Journal of Econometrics, Elsevier, vol. 149(2), pages 136-148, April.
  2. Michael R. Baye & Babur De los Santos & Matthijs R. Wildenbeest, 2012. "What's in a Name? Measuring Prominence, and its Impact on Organic Traffic from Search Engines," Working Papers 2012-09, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  3. Bart J. Bronnenberg & Jean-Pierre Dubé & Matthew Gentzkow & Jesse M. Shapiro, 2014. "Do Pharmacists Buy Bayer? Informed Shoppers and the Brand Premium," NBER Working Papers 20295, National Bureau of Economic Research, Inc.
  4. Ludwig von Auer & Mark Trede, 2010. "The Dynamics of Brand Equity: A Hedonic Regression Approach to the Laser Printer Market," CQE Working Papers 1210, Center for Quantitative Economics (CQE), University of Muenster.
  5. Kusum Ailawadi & Eric Bradlow & Michaela Draganska & Vincent Nijs & Robert Rooderkerk & K. Sudhir & Kenneth Wilbur & Jie Zhang, 2010. "Empirical models of manufacturer-retailer interaction: A review and agenda for future research," Marketing Letters, Springer, vol. 21(3), pages 273-285, September.

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