Risk reduction and umbrella branding

Article Abstract:

A theory that illustrates the function of umbrella branding as a risk-reducing measure is developed and tested. The model of branding decisions is set in a competitive market environment characterized by asymmetric information. The risk-reducing effect is most pronounced in cases where products are expensive. The simultaneous occurrence of branded and unbranded products is also examined by the proposed theory. The low variance in product quality offsets the low quality of branded products as compared to unbranded products, thus resulting in the risk-reducing function of branding. Furthermore, the beneficial aspects of a direct approach to the assessment of product quality is illustrated by the theory. One implication of the proposed branding theory is the existence of productive factors based on reputation.

Product quality, Measurement, Brand name products, Brand names, Risk perception

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What is an attractive industry?

Article Abstract:

Contrary to suggestions made by Business Portfolio Planning techniques, it is predicted that greater average industry profitability may result from greater differences in costs of participant firms and that efficient diversifiers would do better the more profitable their industries, whereas inefficient diversifiers could prosper in less profitable environments. The hypothesis was tested on 128 firms with various levels of diversification. For industry profitability, inefficient diversifiers compete in industries with lower profitability and higher growth than efficient diversifiers; however, this is not true for industry growth.

Performance, Economic aspects, Industrial efficiency, Economic efficiency, Strategic planning (Business), Diversification in industry, Industrial diversification

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Sources of superior performance: market share versus industry effects in the U.S. brewing industry

Article Abstract:

The relationship between performance and market share was studied using data from the US brewing industry from 1969-1979. A partial decomposition analysis of value creation sources was performed by evaluating market share changes of six major brewing companies. The results showed that market share gains were linked to the destruction of firm value, and that a component of industry returns was derived from competition rather than collusion. The research indicates that specific industry conditions influence the success of market share building strategies.

Malt beverages, Competition (Economics), Brewing industry, Breweries, Market share

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