Note—A Brand Switching Model with Implications for Marketing Strategies

Colombo, Richard; Morrison, Donald G.

doi:10.1287/mksc.8.1.89

Cited by 142 publications

(80 citation statements)

References 11 publications

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“…8 Although we assume linear travel costs, the main insights of the article also hold for travel costs that are quadratic in distance. 9 The term "conquesting" is from Colombo and Morrison (1989), who use it in the context of a brand-switching model. Note also that the idea of retention and conquesting is also related to Hauser and Shugan's (1983) conceptualization of defensive and offensive marketing strategies.…”

Section: Product Modificationsmentioning

confidence: 99%

Markets for Product Modification Information

Iyer

Soberman

2000

Marketing Science

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An important product strategy for firms in mature markets is value-adding modifications to existing products. Marketing information that reveals consumers' preferences, buying habits, and lifestyle is critical for the identification of such product modifications. We consider two types of valueadding modifications that are often facilitated by marketing information: retention-type modifications that increase the attractiveness of a product to a firm's loyal customers, and conquesting-type modifications that allow a firm to increase the appeal of its product to a competitor's loyal customers. We examine two aspects of the markets for product modification information: (1) the manner in which retention and conquesting modifications affect competition between downstream firms, and (2) the optimal selling and pricing policies for a vendor who markets product modification information. We consider several aspects of the vendor's contracting problem, including how a vendor should package and target the information to the downstream firms and whether the vendor should limit the type of information that is sold. This research also examines when a vendor can gain by offering exclusivity to a firm.We address these issues in a model consisting of an information vendor facing two downstream firms that sell differentiated products. The model analyzes how information contracting is affected by differentiation in the downstream market and the quality of the information (in terms of how "impactful" the resulting modifications are). We analyze two possible scenarios. In the first, the information facilitates modifications that increase the appeal of products to the loyal customers of only one of the two downstream firms (i.e., one-sided information). In the second scenario, the information facilitates modifications that are attractive to the loyal consumers of both the firms (i.e., two-sided information).The effect of modifications on downstream competition depends on whether they are of the retention or the conquesting type. A retention-type modification increases the "effective" differentiation between the firms and softens price competition. Conquesting modifications, however, have benefits as well as associated costs. A conquesting modification of low impact reduces the "effective" differentiation between competing products and leads to increased price competition. However, when conquesting modifications are of sufficiently high impact, they also have the benefit of helping a firm to capture the customers of the competitor. The vendor's strategy for one-sided information always involves selling to one firm, the firm for which the modifications are of the retention type. When the identified modifications are of low impact, this result is expected because conquesting modifications are profit-reducing for downstream firms. However, even when the information identifies highimpact modifications (and positive profits are generated by selling the information as conquesting information), the vendor is strictly better off by tar...

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Section: Product Modificationsmentioning

confidence: 99%

Markets for Product Modification Information

Iyer

Soberman

2000

Marketing Science

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“…We use three variables to measure the competitive position of each of the brands in the study: market share, loyalty, and conquesting power (see [14], and Appendix for more details). These variables definition is shown in Note that market share can be explained in terms of brand intrinsic loyalty and conquesting power (see Eqs.…”

Section: Private Label National Brand Leader and Reference Brand: Mmentioning

confidence: 99%

“…We use the model by Colombo and Morrison [14] to build the measures of intrinsic loyalty and conquesting power. [14] model is well established in the marketing literature (e.g., [16]).…”

Section: Appendix the Colombo And Morrison Modelmentioning

confidence: 99%

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Competition between Private Labels and National Brands in a Multichannel Retailer

Arce‐Urriza¹,

Cebollada²

2017

Advancing Insights on Brand Management

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This chapter analyzes private label and national brand competition across online and offline channels. We analyze competition using three measures: market share, a loyalty index, and what is called in the literature conquesting power (a measure of the ability of a brand to capture nonloyal consumers). We first provide a brief theoretical introduction and literature research about the topic. We also do an empirical analysis using data of a multichannel grocery retailer that sells both its own private label and national brands, through physical stores and an online store. The data include the purchases made by a sample of multichannel consumers. We find that the private label increases, in general, its competitive position in the online channel, compared to the offline channel. However, this result does not hold for all the product categories. We discuss some drivers of this general improvement, as well as potential causes for the differences between categories. We conclude with some recommendations for multichannel retailers and manufacturers.

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“…Colombo and Morrison (1989) use a switching matrix to understand cross-competitive effects in the automobile market, but their analysis does not include any elements of the marketing mix. Thompson and Noordewier (1992) included dummy variables in a time-series model to estimate the effects of incentive programs.…”

Section: Introductionmentioning

confidence: 99%

Practice Prize Winner—A Nested Logit Model of Product and Transaction-Type Choice for Planning Automakers' Pricing and Promotions

Silva-Risso

Ionova

2008

Marketing Science

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W e develop a consumer response model to evaluate and plan pricing and promotions in durable-good markets. We discuss its implementation in the U.S. automotive industry, which "spends" about $45 billion each year in price promotions. The approach is based on a random effects multinomial nested logit model of product (e.g., a vehicle model, such as Hyundai Tucson), and transaction-type choice. Transaction types include combinations of acquisition types (e.g., purchase versus lease) and pricing instruments (cash rebates, reduced APR financing, lease payment discounts). We estimate the model using hierarchical Bayes methods to capture response heterogeneity at the local market level. We find key characteristics unique to durable-good markets. First, consumers are heterogeneous in both their brand and transaction-type preferences. Second, consumers differ in their overall price sensitivity as well as in their relative sensitivity to alternative pricing instruments (e.g., cash discounts, reduced monthly payments). Third, the most effective pricing programs tend to be those in which automakers offer consumers a menu of options to choose from (e.g., a choice among a cash discount, reduced interest rate financing, or a lease payment discount). We illustrate the model through an empirical application to a sample of data drawn from J.D. Power transaction records in the entry SUV segment and discuss examples of actual implementations.

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Note—A Brand Switching Model with Implications for Marketing Strategies

Cited by 142 publications

References 11 publications

Markets for Product Modification Information

Markets for Product Modification Information

Competition between Private Labels and National Brands in a Multichannel Retailer

Practice Prize Winner—A Nested Logit Model of Product and Transaction-Type Choice for Planning Automakers' Pricing and Promotions

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