Impact of product differentiation, marketing investments and brand equity on pricing strategies

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).