The Evolution of Brand Preferences: Evidence from Consumer Packaged Goods
We study the long-run evolution of brand preferences, using new data on consumers’ life histories and purchases of consumer packaged goods. Variation in where consumers have lived in the past allows us to isolate the causal effect of past experiences on current purchases, holding constant contemporaneous supply-side factors such as availability, prices, and advertising. Heterogeneity in brand preferences explains at least 40 percent of geographic variation in market shares. These preferences develop endogenously as a function of consumers’ life histories and are highly persistent once formed, with experiences 50 years in the past still exerting a significant effect on current consumption. Variation across product categories shows that the importance and durability of brand preferences are related in an intuitive way to both advertising levels and the social visibility of consumption. A simple habit model of preference formation motivated by our results suggest that brand preferences create large entry barriers and durable advantages for incumbent firms, and can explain persistence of first-mover advantage over long periods.
|Professor Bronnenberg is an expert in demand analysis, the success of new products, the measurement of price and promotion effectiveness, and marketing strategy. He is also interested in the value and persistence of branding, order-of-entry effects, and innovation. His research has appeared in top management and marketing journals and has won several best paper awards in these journals. He is an associate editor for the International Journal of Research in Marketing, Journal of Marketing, Marketing Science, Management Science, and Quantitative Marketing and Economics. He serves on the editorial board of several other scholarly journals.
Professor Bronnenberg has taught in executive education programs in several industries including pharmaceuticals, medical device, banking, consumer packaged goods, and others.
|Dr. S. Puntoni|