Seminar – Targeted Branding, Price Competition and Consumer Data

Professor Lynne Pepall, Tufts University

The extensive data on consumer preferences that has been facilitated by digital technology can also be used to reveal distinctive traits and personalities about a firm’s potential consumers. Understanding more about what different consumers like and value can help a firm target its branding strategy as well its pricing strategy. We investigate how targeted branding affects price competition in a spatial duopoly market. Our findings suggest that when targeted branding is valued by consumers it softens competition and improves profitability, compared to the benchmark case of price discrimination. Firms have an incentive to engage in branding even though it is a costly activity and branding costs are incurred before transactions take place. The more profitable branding strategy is when there are “locational advantages” to the firm in its branding, even if those strategies are costlier. Targeted branding leads to higher average prices being set and greater price dispersion than would be observed in the benchmark case.

Speaker bio

Professor Pepall received her PhD from the University of Cambridge. She was a research fellow at the European University Institute in Florence and taught at Concordia University before joining the Department of Economics at Tufts, where she was promoted to Professor in 2003. Professor Pepall served as the dean of the Graduate School of Arts and Sciences from 2006-2013. Her primary field of research is industrial organistion.

She has published her work in many journals including Economic Journal, Journal of Business, International Journal of Industrial Organisation, Journal of Economics and Management Strategy, Journal of Industrial Economics, and Review of Industrial Organisation. She is the author (with D. Richards and G. Norman) of the textbook, “Industrial Organisation: Contemporary Theory and Empirical Applications”.