Firm reputation, advertising investment, and price premium: The role of collective brand membership in high‐quality wines

Abstract

Abstract Research has recognized that the price of an experience good is not only determined by firm and collective reputation, which act as proxies of firm product quality, but also by the firm's advertising investment. This study examines whether pricing these goods as a function of firm advertising investment and firm reputation depends on a collective, versus noncollective, brand strategy. The central assumption of this article is that a collective brand can increase perceived differentiation among the individual brands associated with it, and thus, that collective brand membership can moderate the effects of firm advertising investment and firm reputation on product price. The results obtained from a panel of companies in an experience‐goods industry (i.e., wineries) between 1999 and 2013 show that the relative effect of collective brand membership on product price is higher when the company has higher advertising investment and a higher reputation. [EconLit citations:Q11, Q13, M37]

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