Paper Els Gijsbrechts accepted for publication in the International Journal of Research in Marketing
The paper by Els Gijsbrechts on “What Drives Brands’ Pricing Metrics? An Empirical Examination of the Chinese Packaged Goods Industry,” co-authored by Bernadette van Ewijk (former Tilburg PhD and currently UD at the UvA) and Jan-Benedict Steenkamp (at UNC in Chapel Hill), has been accepted for publication in the International Journal of Research in Marketing.
As competition among CPG brands intensifies in both emerging and developed markets, brand managers increasingly focus on price as the weapon-of-choice. This calls for an assessment of not only their own price response, but also of their competitive pricing power, and its antecedents. The authors propose a set of universally applicable (“etic”) and country-specific (“emic”) drivers of brand price elasticity, clout, and vulnerability, for the world’s largest emerging market (viz., China). Leveraging a unique and large-scale data set from this market, they find that high price response is not necessarily indicative of high clout, nor does it signal high vulnerability. Hence, all three pricing metrics matter. They also uncover marked differences in the impact of brand- and category-level drivers on these three metrics. Established etic factors such as line length, distribution intensity, and stockpilability have a substantial effect on one or more pricing metrics. Among the emic factors, Chinese embeddedness, and especially social demonstrance play an important role: it strongly drives down brands’ price sensitivity, but also reduces the intensity of price competition in the category and makes brands less vulnerable to rival actions. Foreign brands, in contrast, exhibit higher price response, and do not enjoy higher clout nor lower vulnerability than their domestic counterparts. Hence, they neither benefit from the aura, nor suffer from the liability, of foreignness. Overall, the study adds to empirical generalizations on the impact of price, and helps managers improve the success of their pricing strategies.