• How to Make Money by Licensing Your Brand: Ask Hello Kitty

    Growing the business by licensing their brands is tricky business for many firms. On the one hand, if the brand is not that well-known, there will be a few takers for the license. On the other hand, if the brand becomes too well-known and too many licensees want to be part of the game, quality control is difficult to accomplish. Compounding the dilemma is the stability of the target audience’s preferences and tastes.

    Take a brand like Hello Kitty. While people may have liked it when they were kids, do they still retain their preferences when they grow up? Typically not. Therefore, most marketers of kids’ products face the challenge of targeting a moving audience. Companies like Disney, MTV, and Mattel toys have constantly faced this challenge. One brand, Hello Kitty, seems to have retained many of its customers by marketing to them over different life stages. Is that the key to its profitable growth? There are interesting lessons from Sanrio, the Japanese parent company of Hello Kitty. It seems making money by licensing its brand is child’s play for Hello Kitty 

  • Will Google brand become generic like Xerox and Kleenex?

    Google’s brand is valued at $66 billion (source: Interbrands). Is Google in danger of being confined to the “brands that turned generic” roster–a  la Xerox, Kleenex, and Aspirin?

  • The Dynamic Impact of Product-Harm Crises on Brand Preference and Advertising Effectiveness: An Empirical Analysis of the Automobile Industry

    Liu and Shankar

    by Yan Liu and Venky Shankar

    This article appeared in Management Science.

    Product-harm crises (recalls) carry negative product information which adversely affects brand preference and advertising effectiveness. This negative impact of product-harm crises may differ across recall events depending on media coverage of the event, crisis severity, and consumers’ prior beliefs about product quality. We develop a state space model to capture the dynamics in brand preference, advertising effectiveness and consumer response to product recalls, integrate it with a random coefficient demand model, and estimate it using a unique dataset containing 35 automobile brands, 193 auto sub-brands, and 359 recalls during 1997-2002. Our results reveal that consumers respond more negatively to product recalls with greater media attention, more severe consequences, and higher perceived product quality. Furthermore, they show that sub-brand advertising effectiveness declines by a greater amount than parent-brand advertising and the decline in effectiveness of the recalled sub-brand’s advertising spills over to other sub-brands under the same parent-brand.

  • An Empirical Analysis of Determinants of Retailer Pricing


    by Venkatesh Shankar and Ruth N. Bolton

    This article was published in Marketing Science, 23 (Winter 2004), 28-49.

    This paper empirically investigates the determinants of retailers’ pricing decisions with a focus on competitor factors. We classify the different types of pricing strategies based on four underlying dimensions.  These dimensions are price consistency, price-promotion intensity, price-promotion coordination, and relative brand price.  We develop and estimate a simultaneous equation model of how each of the underlying dimensions of retailers’ pricing strategies is influenced by variables representing the market, chain, store, category, brand, customer and competition. Our empirical analysis is based on optical scanner data that describe 1364 brand-store combinations from six categories of consumer packaged goods in fiveU.S.markets over a two year time period. The four underlying pricing dimensions are statistically related to: (1) competitor price and deal frequency (competitor factors), (2) storability and necessity (category factors), (3) chain positioning and size (chain factors), (4) store size and assortment (store factors), (5) brand preference and advertising (brand factors), and (6) own price and deal elasticities (customer factors).  Competitor factors explain the most variance in retailer pricing strategy, followed by category and chain factors.  Only in the cases of price-promotion coordination and relative brand price, do category and chain factors explain much variance in retailer pricing.  Store, brand and customer factors capture an insignificant proportion of explained variance in retailer pricing. These findings are useful to retailers in profiling alternative pricing strategies.  They can also help manufacturers make informed decisions about the levels of marketing support spending for their brands that are appropriate for different retailers.  We outline the managerial implications based on the results.

  • An Empirically Derived Taxonomy of Retailer Pricing and Promotion Strategies


    by Ruth N. Bolton and Venkatesh Shankar

    This article was published in the Journal of Retailing, 79 (2003), 213-224.

    Most research categorizes grocery retailers as following either an EDLP or a HiLo pricing strategy at a store or chain level, whereas this paper studies retailer pricing and promotions at a brand-store level. It empirically examines 1,364 brand-store combinations from 17 chains, 212 stores and six categories of consumer package goods in five U.S. markets.  Retailer pricing and promotion strategies are found to be based on combinations of four underlying dimensions:  relative price, price variation, deal intensity and deal support.  At the brand-store level, retailers practice five pricing strategies, labeled exclusive, moderately promotional, HiLo, EDLP, and aggressive pricing.  Surprisingly, the most prevalent pricing strategy is characterized by average relative brand price, low price variation, medium deal intensity, and medium deal support.  The findings provide some initial benchmarks and suggest that retailers should closely monitor their competitors’ price decisions at the brand level.