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Measures of Brand Loyalty

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  • Allender, William J.
  • Richards, Timothy J.

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.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49536.

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Date of creation: 2009
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Handle: RePEc:ags:aaea09:49536

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Keywords: Consumer/Household Economics; Food Consumption/Nutrition/Food Safety; Marketing;

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Cited by:
  1. Empen, Janine & Loy, Jens-Peter & Weiss, Christoph R., 2011. "Price Promotions and Brand Loyalty: Empirical Evidence for the German Breakfast Cereals Market," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114341, European Association of Agricultural Economists.

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