Impact of Brand Equity Change on What- and When-to-Buy Decisions Sample Clauses

Impact of Brand Equity Change on What- and When-to-Buy Decisions. To quantify the impact of brand equity change on consumers’ what and when-to-buy deci- sions, I run two counterfactual simulations. In counterfactual scenario 1, I assess the impact of Chrysler LLC’s brand equity decrease. Specifically, I simulate market shares for the market where GM’s brand equity increases and Chrysler LLC closes dealerships but where Chrysler LLC’s brand equity remains the same. Then I compare these market shares with the baseline market shares. Similarly, in counterfactual scenario 2, I evaluate the effect of GM’s brand eq- uity increase on consumer’s brand and inter-temporal demand substitution. In order to do so, I simulate market shares in the situation where Chrysler LLC’s brand equity decreases and its dealers are closed, but GM’s brand equity remains the same. Again, I compare the market shares computed under this scenario with the baseline market shares to quantify the extent and timing of consumer switching. Figure 8 shows the impact of Chrysler LLC’s Chapter 11 bankruptcy filing on consumers’ what-to-buy decisions. The results suggest that approximately 8 percent of Chrysler LLC con- xxxxxx switch to other brands or defer their purchase (2.63 percent) due to the reduction in Chrysler LLC’s brand equity. The Chrysler brand of Chrysler LLC is the most negatively af- fected brand due to reduction in Chrysler LLC’s brand equity. On the other hand, Chrysler LLC’s Dodge brand’s market share is not affected very much by the erosion in Chrysler LLC’s brand equity. When Chrysler LLC files for Chapter 11 protection, most of Chrysler LLC’s prospective customers who switch, switch to Japanese brands such as Toyota (1.35 percent) and Honda (1.32 percent) as opposed to the incumbent American brands such as Chevrolet (0.07 percent) and Ford (0.12 percent). The simulations suggests that the brand equity changes caused by Chrysler LLC seeking bankruptcy protection varies significantly across Chrysler LLC’s brand portfolio. Figure 9 depicts the impact of GM filing for Chapter 11 bankruptcy protection. As can be seen, Chevrolet realizes higher sales. This is because the net brand equity of GM is higher after emerging from bankruptcy than its predecessor, i.e. financially distressed GM. Not only does GM draw share away from prospective Honda buyers, but it does so by accelerating their purchase by a few months (i.e. inter-temporal demand substitution).