Brand Firm Performance and Tough Economic Times

Abstract

Negative income shocks may cause lower consumption and a switch in consumption from brand to non‐brand products as consumers economize on price (Larkin [Larkin, Y., 2013]). This switch can also be the result of the vigorous promotion of private label products (Lamey et al. [Lamey, L., 2012]). However, dedicated customers and conspicuous consumption (Veblen [Veblen, T., 1899]; Berger and Ward [Berger, J., 2010]) can mitigate or even neutralize these effects on brand firms. Consistent with the notion that enduring consumption by brand customers has a stronger effect, we find that compared with non‐brand firms, brand firms performed better in and recovered quicker from the difficult economic times of the late 2000s.