Modeling Competitive Infringement on Brand Name

When a brand promotes or cuts its price, the competitive effedcts on other brands within the product category may differ widely in magnitude. However, many brand choice models are not equipped to deal with differential or asymmetric competitive effects. This paper presents a choice model designed to capture the competitive infringement of one brand upon another. Infringement is modeled as a function of the similarity between two brands, the positioning advantage of the competing brand, and the promotional activity of the competing brand. The model is operationalized and tested at an aggregate level, using UPC scanner panel data for ground and instant caffeinated coffee.