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Effect of Sales on Brand Loyalty

Author

Listed:
  • Rui Huang

    (University of California, Berkeley)

  • Jeffrey Perloff

    (University of California, Berkeley)

  • Sofia Villas-Boas

    (University of California, Berkeley)

Abstract

Although many theoretical industrial organization models are based on the existence of a critical mass of exogenously "brand loyal" consumers, we find little empirical evidence supporting these assumptions in the orange juice retail market. There are very few loyal consumers. More importantly, the frequency with which stores conduct sales affects the share of loyal types so that loyalty is endogenous rather than exogenous. Households' demographics have statistically significant but economically minor effects on switching behavior. Switching across frozen and refrigerated states is very common, leading to more complicated substitution patterns and less loyalty than one observes looking at each state separately.

Suggested Citation

  • Rui Huang & Jeffrey Perloff & Sofia Villas-Boas, 2006. "Effect of Sales on Brand Loyalty," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 1011, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:1011
    Note: oai:cdlib1:are_ucb-1103
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    File URL: http://repositories.cdlib.org/cgi/viewcontent.cgi?article=1103&context=are_ucb
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    Keywords

    loyalty; sales;

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