Back
 AJIBM  Vol.9 No.12 , December 2019
Brand Loyalty in a Bertrand-Type Oligopoly Setting
Abstract: It appears that in today’s brand-proliferating, constantly market-segmenting and technologically evolving global economy, consumer perceptions affect an entire industry in which brand loyalty is possible such as the extremely hot and rapidly developing global smartphone industry. In a brand-loyalty-prone industry, what are the implications of brand loyalty in terms of, among others, industry price, sales and profit? I propose a market structure in which each firm’s profit depends on sales of a brand realized in a captive market segment as well as on sales of the same brand realized in a non-captive market segment; ignoring costs of production and assuming that all firms simultaneously enter into the two market segments and that price discrimination of the 3rd degree is not possible, I employ a Bertrand-type duopoly structure and then aggregate over n firms. Counterintuitively, industry price, quantity and profit all rise with entry. The findings are primarily due to the assumed entry condition (that each entrant enters into two market segments one of which is a monopoly) and secondarily to the inability of the sellers to price discriminate. I conclude that experience-type data in the smartphone industry can be considered as somewhat supportive of the proposed structure and the derived theoretical results.
Cite this paper: Kantarelis, D. (2019) Brand Loyalty in a Bertrand-Type Oligopoly Setting. American Journal of Industrial and Business Management, 9, 2250-2262. doi: 10.4236/ajibm.2019.912149.
References

[1]   Kantarelis, D. (2020) Theories of the Firm. 6th Edition, Inderscience, Geneva, 96-102.

[2]   Tartaglione, A.M., Cavacece, Y., Russo, G. and Granata, G. (2019) A Systematic Mapping Study on Customer Loyalty and Brand Management. Administrative Sciences, 9, 1-21.
https://doi.org/10.3390/admsci9010008

[3]   Cachon, G.P. (2018) A Research Framework for Business Models: What Is Common among Fast Fashion, E-Tailing, and Ride Sharing? Management Science (Articles in Advance).
https://doi.org/10.2139/ssrn.3250441

[4]   Oliver, R., Aravindakshan, A. and Rubel, O. (2019) Measuring and Forecasting Mobile Game App Engagement. International Journal of Research in Marketing, 36, 185-199.
https://doi.org/10.1016/j.ijresmar.2019.01.002

[5]   Sayedi, A. (2018) Real-Time Bidding in Online Display Advertising. Marketing Science, 37, 507-684.
https://doi.org/10.1287/mksc.2017.1083

[6]   Yoganarasimhan, H. (2019) Search Personalization Using Machine Learning. Management Science (Articles in Advance).
https://doi.org/10.1287/mnsc.2018.3255

[7]   Haddad, C. and Hornuf, L. (2019) The Emergence of the Global Fintech Market: Economic and Technological Determinants. Small Business Economics, 53, 81-105.
https://doi.org/10.1007/s11187-018-9991-x

[8]   Suchánek, P. and Králová, M. (2019) Customer Satisfaction, Loyalty, Knowledge and Competitiveness in the Food Industry. Economic Research-Ekonomska Istraivanja, 32, 1237-1255.
https://doi.org/10.1080/1331677X.2019.1627893

[9]   Zhang, X. (2019) Research on the Influence Factors of Brand Experience on Consumers Brand Loyalty. Open Journal of Business and Management, 7, 556-561.
https://doi.org/10.4236/ojbm.2019.72038

[10]   Molinillo, S., Ekinci, Y. and Japutra, A. (2018) A Consumer-Based Brand Performance Model for Assessing Brand Success. International Journal of Market Research, 61, 93-110.
https://doi.org/10.1177/1470785318762990

[11]   Garg, R., Mukherjee, J. and Biswas, S. (2019) Consumer-Based Determinants of Brand Love and Its Consequences: A Quantitative Research. International Journal of Business and Emerging Markets, 11, 122-143.
https://doi.org/10.1504/IJBEM.2019.10022495

[12]   Gauthier, C., Chrysochou, P. and Meyer-Waarden, L. (2019) Brand Loyalty Evolution and the Impact of Category Characteristics. Marketing Letters, 30, 57-73.
https://doi.org/10.1007/s11002-019-09484-w

[13]   Dimitroff, V. (2018) When Has Extreme Loyalty Ever Paid Off?
https://www.quora.com/When-has-extreme-loyalty-ever-paid-off?top_ans=85731194

[14]   BankMyCell (2019).
https://www.bankmycell.com/blog/smartphone-brand-loyalty-during-trade-in-2019

[15]   Kantarelis, D. (1994) Captive and Common Markets without Price Discrimination. In: Amin, S.G., Barr, P.B. and Moore, D.L., Eds., World Business Trends, Academy of Business Administration, Wembley, 279-286.

[16]   Rosenthal, R.W. (1980) A Model in Which an Increase in the Number of Sellers Leads to a Higher Price. Econometrica, 48, 1575-1579.
https://doi.org/10.2307/1912828

[17]   Holst, A. (2019). https://www.statista.com

[18]   Khandelwal, R. (2019) Global Smartphone Companies: An Overview.
https://marketrealist.com/2019/09/global-smartphone-companies-an-overview

[19]   Kastrenakes, J. (2019) How Phones Went from $200 to $2,000.
https://www.theverge.com/2019/3/18/18263584/why-phones-are-so-expensive-price-apple-samsung-google

[20]   Protocol Digital Marketing (2019).
https://www.protocol.gr/number-of-smartphones-sold-to-end-users-worldwide-from-2007-to-2018

[21]   Gadgets Now (2018).
https://www.gadgetsnow.com/slideshows/ranked-worlds-6-most-profitable-smartphone-companies/Sixth-Xiaomi/photolist/62273542.cms

[22]   Fan, Y. and Yang, C.Y. (2019) Competition, Product Proliferation and Welfare: A Study of the US Smartphone Market.

 
 
Top