Multiattribute Demand, Cost and Competitive Repositioning

Posted: 7 Jan 1999

See all articles by Jeongwen Chiang

Jeongwen Chiang

Hong Kong University of Science & Technology (HKUST) - Department of Marketing

Dan Horsky

Simon Graduate School of Business, University of Rochester

Paul Nelson

Simon School, University of Rochester

Date Written: 1998

Abstract

Firms periodically alter the characteristics of their brands in hope of increasing their popularity and profitability. This paper develops and illustrates a methodology to evaluate these multi-dimensional repositioning strategies. We start by forwarding a procedure to estimate the multiattribute demand and cost functions facing firms in an oligopolistic market. Assuming that the market is in a Nash price equilibrium, an estimation procedure which utilizes individual level consumer survey data is suggested. The demand functions are based on a heterogeneous multinomial logit model, while the cost functions are multiplicative. A procedure for identifying optimal repositioning strategies which utilizes the estimated multiattribute demand and cost functions is developed. In addition, the relationship between the perceptual attributes used by consumers to evaluate brands and the physical attributes which are pertinent to brand design engineers is addressed. The repositioning methodology is illustrated using automobile market survey data.

JEL Classification: L11

Suggested Citation

Chiang, Jeongwen and Horsky, Dan and Nelson, Paul E., Multiattribute Demand, Cost and Competitive Repositioning (1998). Simon School of Business Working Paper MS 98-01. Available at SSRN: https://ssrn.com/abstract=137198

Jeongwen Chiang

Hong Kong University of Science & Technology (HKUST) - Department of Marketing ( email )

Department of Marketing
Clear Water Bay, Kowloon
Hong Kong

Dan Horsky (Contact Author)

Simon Graduate School of Business, University of Rochester ( email )

Carol Simon Hall 3-210
Rochester, NY 14627
United States
585-275-4483 (Phone)

Paul E. Nelson

Simon School, University of Rochester ( email )

Carol Simon Hall 3-204
Rochester, NY 14627
United States
585-275-2550 (Phone)

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