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Impact of product differentiation, marketing investments and brand equity on pricing strategies: A brand level investigation

Nebojsa S. Davcik (ISCTE Business School, University Institute of Lisbon (ISCTE-IUL), Lisbon, Portugal)
Piyush Sharma (School of Marketing, Curtin Business School, Curtin University, Bentley, Australia)

European Journal of Marketing

ISSN: 0309-0566

Article publication date: 11 May 2015

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Abstract

Purpose

This paper aims to show the effect of brand equity, marketing investment and product differentiation on price in small and medium enterprises (SMEs), multinational companies (MNCs) and retailers (private labels). Academics have been researching brand equity, return on investment and effects of product differentiation for many years, but there has been little work that has taken a holistic view.

Design/methodology/approach

The author studied an aggregate data set for 735 fast-moving consumer goods (FMCG) brands, taken from Nielsen (10,282 households). Regression analysis was used in the first step, a cluster analysis in the second step of modeling procedure.

Findings

The study suggests that brand equity, marketing investment and product differentiation are closely associated with price. Using a cluster analysis, the authors found that the premium price is significantly associated with product differentiation based on innovation and company type.

Practical implications

The managerial implications of the models estimated by regression analysis are discussed as well as the results of the cluster analysis and possible research enhancements.

Originality/value

The role of the value in brand performance output has not been investigated in the financial context, only in consumer or marketing mix context. Little is known about how price strategy depends on brand equity, product innovation activities or marketing investments intended to improve brand performance, neither how this strategy improves brand performance among different players in the market (retailers, SMEs and MNCs).

Keywords

Acknowledgements

Comments and suggestions from Colin Jevons, Richard Priem and Jonathan Bohlmann on an early version of this manuscript are greatly appreciated. The authors thank to participants of the World Marketing Congress 2013 (Melbourne) and 8th Global Brand Conference (Porto) for their valuable insights. Some parts of the early stages of this study were developed during the first author doctorate program at the University of Padua (Padova, Italy). The authors are grateful to the Business Research Unit (BRU) of the University Institute of Lisbon (ISCTE-IUL) for their support in the editing process.

Citation

Davcik, N.S. and Sharma, P. (2015), "Impact of product differentiation, marketing investments and brand equity on pricing strategies: A brand level investigation", European Journal of Marketing, Vol. 49 No. 5/6, pp. 760-781. https://doi.org/10.1108/EJM-03-2014-0150

Publisher

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Emerald Group Publishing Limited

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