Consumers Choice between Brand and Non-brand Goods Depending on Budget Constraint
|1.||Part 1: Economics||4|
|1.2.||Marginal Rate of Substitution||6|
|1.5.||Constrained consumer choice||9|
|2.||Part 2: Marketing||11|
|2.1.||Definition of Brand||11|
|2.2.||Consumers Brand Choice||12|
|2.5.||Brands influence on consumer’s choice||16|
|3.||Part 3: Case Study – Volkswagen’s acquisition of Skoda auto||17|
|3.1.||History of Skoda||17|
|3.2.||History of Volkswagen||17|
|3.3.||Building image of Skoda||18|
|3.4.||Comparing sales of Volkswagen and Skoda||19|
In our research work analyzing theory of microeconomics and marketing we conclude that the brand has the power to make two goods that are potentially perfect substitutes into two goods that are not perceived as substitutes by the consumer. From marketing point we sum up that the brand goods for the consumer is more preferable. From microeconomics theory part we came to conclusion that the consumption bundle maximizes consumers total utility by increasing budget constraint, if consumer is choosing better quality goods.
In practical part we analyzed sales of two car manufacturers: Skoda and Volkswagen. So the sales have increased over time, but as it is seen by the graphs and calculations the Skoda has bigger growth of sales. That is because of the successful Skoda marketing strategies and Volkswagen acquired Skoda and implemented quality.
Starting our research paper we set the hypothesis that consumers preferably choose brands over non-brand products depending on budget constraint. At the end of our research we concluded that consumers do choose brands over non-brands depending on their budget constraint thus the hypothesis confirms.
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