Measuring Brand Value in an Equilibrium Framework

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...

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Bibliographic Details
Published in:Marketing science (Providence, R.I.) R.I.), 2009-01, Vol.28 (1), p.69-86
Main Authors: Goldfarb, Avi, Lu, Qiang, Moorthy, Sridhar
Format: Article
Language:English
Subjects:
Advertising
Advertising expenditures
Analysis
Brand equity
brand equity measurement
Brand name products
branding
Brands
Business management
Cereals
Consumer behavior
Consumer behaviour
Consumers
Contrafactuals
Corporate planning
Decision making
Equilibrium
Equilibrium (Economics)
Estimates
Estimating techniques
Estimation methods
Industrial organization
Market share
Market shares
Marketing
Marketing research
Measurement
Methods
new empirical industrial organization
Price premiums
Prices
Profits
Quakers
Retail prices
Retail stores
Studies
Value systems
Wholesale prices
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Summary: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.
ISSN:0732-2399
1526-548X
DOI:10.1287/mksc.1080.0376