Umbrella brand price premiums: effects of compatibility, similarity, and portfolio size

Umbrella brand price premiums: effects of compatibility, similarity, and portfolio size Purpose – The study aims to examine the characteristics of product portfolio on the price premium of an umbrella brand. Specifically, the study seeks to explore three aspects of a product portfolio: the presence of attribute compatibility, similarity, and portfolio size. Design/methodology/approach – A total of 232 subjects participated in the 2 (with/without compatibility)×2 (product sets: high similarity/low similarity)×3 (portfolio size: small, medium and large). Results support the hypothesis about the three factors. Findings – Experimental results show that subjects on average are willing to pay a 9.45 percent price premium for the brand with the attribute‐compatible portfolio. The effect of attribute‐compatibility is more obvious for a similar than a dissimilar portfolio. In addition, larger portfolios dilute the price premium. Originality/value – The study first addresses the factor of attribute compatibility among a product portfolio. A product portfolio with attribute compatibility has features linking products together. For example, the “direct‐print” feature among Canon products allows its cameras to print directly on Canon printers. The study finds that such a feature increases a brand price premium by 9.45 percent. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Product & Brand Management Emerald Publishing

Umbrella brand price premiums: effects of compatibility, similarity, and portfolio size

Journal of Product & Brand Management, Volume 20 (1): 7 – Mar 1, 2011

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1061-0421
DOI
10.1108/10610421111108021
Publisher site
See Article on Publisher Site

Abstract

Purpose – The study aims to examine the characteristics of product portfolio on the price premium of an umbrella brand. Specifically, the study seeks to explore three aspects of a product portfolio: the presence of attribute compatibility, similarity, and portfolio size. Design/methodology/approach – A total of 232 subjects participated in the 2 (with/without compatibility)×2 (product sets: high similarity/low similarity)×3 (portfolio size: small, medium and large). Results support the hypothesis about the three factors. Findings – Experimental results show that subjects on average are willing to pay a 9.45 percent price premium for the brand with the attribute‐compatible portfolio. The effect of attribute‐compatibility is more obvious for a similar than a dissimilar portfolio. In addition, larger portfolios dilute the price premium. Originality/value – The study first addresses the factor of attribute compatibility among a product portfolio. A product portfolio with attribute compatibility has features linking products together. For example, the “direct‐print” feature among Canon products allows its cameras to print directly on Canon printers. The study finds that such a feature increases a brand price premium by 9.45 percent.

Journal

Journal of Product & Brand ManagementEmerald Publishing

Published: Mar 1, 2011

Keywords: Brands; Premium pricing; Brand management

References

  • Functional compatibility risk and consumer preference for product bundles
    Harris, J.; Blair, E.A.
  • Consumer preference for product bundles: the role of reduced search costs
    Harris, J.; Blair, E.A.
  • Commodity bundling for competitive advantage: strategic implications
    Lawless, M.

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