The measurement and utility of brand price elasticities

Abstract

The price elasticities of brands have been measured by analysis of store‐level data, field experiments and regression analysis. These methods are reviewed and the main findings are reported. Price elasticities vary in response to a variety of market conditions but there are also product‐specific factors that are related to elasticity. The price elasticities of the leading five brands in 100 categories were established by regression. Elasticities were found to be widely spread and 19% were positive. Stronger regression estimates tended to produce higher elasticities. The study also revealed: greater price elasticity magnitudes for new brands; no difference between growing and declining brands; brand leaders were slightly less sensitive to price changes than other brands; higher adspend was associated with lower price sensitivity.

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