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Targeted Advertising and Social Status

Author

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  • Nick Vikander

    (Erasmus University Rotterdam, and University of Edinburgh)

Abstract

This paper shows how a firm can use non-targeted advertising to exploit consumers' desire for social status. A monopolist sells multiple varieties of a good to consumers who each care about what others believe about his wealth. Advertising allows consumers both to buy different varieties and to recognize them when others buy. In equilibrium, the firm advertises each variety to those who will buy but also to all poorer consumers who will not, so that they understand what having the goods signals. If concern for status is sufficiently high, then the firm will only place a single variety on the market.

Suggested Citation

  • Nick Vikander, 2011. "Targeted Advertising and Social Status," Tinbergen Institute Discussion Papers 11-016/1, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20110016
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    File URL: https://papers.tinbergen.nl/11016.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mazali, Rogério & Rodrigues-Neto, José A., 2013. "Dress to impress: Brands as status symbols," Games and Economic Behavior, Elsevier, vol. 82(C), pages 103-131.
    2. Rayo Luis, 2013. "Monopolistic Signal Provision," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 1-32, May.
    3. Friedrichsen, Jana, 2013. "Image concerns and the provision of quality," Discussion Papers, Research Unit: Market Behavior SP II 2013-211, WZB Berlin Social Science Center.
    4. George Deltas & Eleftherios Zacharias, 2018. "Product Proliferation and Pricing in a Market with Positional Effects," Working Papers 242312853, Lancaster University Management School, Economics Department.
    5. Friedrichsen, Jana, 2018. "Signals Sell: Product Lines when Consumers Differ Both in Taste for Quality and Image Concern," Rationality and Competition Discussion Paper Series 70, CRC TRR 190 Rationality and Competition.
    6. Nana Adrian, 2019. "Price Discrimination and Salient Thinking," Diskussionsschriften dp1906, Universitaet Bern, Departement Volkswirtschaft.

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    More about this item

    Keywords

    advertising; targeting; social status;
    All these keywords.

    JEL classification:

    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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