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Keywords:

  • D12;
  • M31;
  • Q13
  • Brands;
  • Willingness to pay;
  • Regional differences;
  • Price premium;
  • Maximum entropy

Abstract

Using survey data collected in multiple locations (California and Texas in the United States and Revohot in Israel), we quantify category- and location-specific variations of consumers’ willingness to pay (WTP) for brand products after controlling for consumer characteristics. We find that consumers have a similar qualitative assessment of brand value in different product categories across different locations. That is, consumers have a stronger preference and higher WTP for brands in consumer electronics, followed by clothing and then processed food, and the lowest in fresh produce. Furthermore, we simulate price premiums and market shares of brands relative to generic products in different categories. Simulation results suggest that brands in fresh produce have the highest price premium but lowest market share. Despite the similarities, the magnitude of WTP for brands as well as the simulated price premium and the corresponding market share in the same product category are location variant. The similarities and dissimilarities suggest validity of having global brand strategies adapted to local conditions, that is, the so-called “thinking globally and acting locally” strategy.