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Effect of Sales on Brand Loyalty

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  • Villas-Boas, Sofia B
  • Perloff, Jeff
  • Huang, Rui

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.
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Suggested Citation

  • Villas-Boas, Sofia B & Perloff, Jeff & Huang, Rui, 2006. "Effect of Sales on Brand Loyalty," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt85s3h88b, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt85s3h88b
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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.
    2. Rezgar Mohammed & Olga Murova, 2019. "The Effect of Price Reduction on Consumer's Buying Behavior in the U.S. Differentiated Yogurt Market," Applied Economics and Finance, Redfame publishing, vol. 6(2), pages 32-42, March.
    3. Maxim Sinitsyn, 2012. "Coordination of Price Promotions in Complementary Categories," Management Science, INFORMS, vol. 58(11), pages 2076-2094, November.
    4. Allender, William J. & Richards, Timothy J., 2009. "Measures of Brand Loyalty," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49536, Agricultural and Applied Economics Association.
    5. Mathur, Sameer & Sinitsyn, Maxim, 2013. "Price promotions in emerging markets," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 404-416.

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