Price impact: The advertising premium

Charles Young

Marketing mix models represent a behaviourist conception of the marketplace. If you lower the price, sales go up as more people buy your product, if you raise it, sales go down.

Price impact: The advertising premium

Charles YoungAmeritest

Marketing mix models treat price as a variable, independent of advertising when, in fact, high-quality advertising supports premium prices.

Price is at the centre of the concept of brand. “If you can't charge a premium price for your product,” wrote the late management guru Peter Drucker, “then you don't have a brand!” The ability to charge premium prices is the reason why businesses that own brands are generally more profitable than businesses that do not.

In the Wild West days of capitalism, the first brands were created as markers of quality to...

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