Role of Nonprice Variables in Intertier Competition

Abstract

This study examines the role of nonprice variables in intertier competition (low-tier versus high-tier brands). Specifically, we examine the asymmetric impact of nonprice variables, such as features, displays, and prior product experience, on brand choice between tiers. Prior research has established that high-tier brands benefit disproportionately from price promotions. From an analysis of scanner panel data for two product categories, we show that low-tier brands benefit disproportionately more than high-tier brands from enhancements in nonprice variables.