Consumers’ Willingness to Pay Using an Experimental Auction Methodology: Applications to Brand Equity

by Yan-Ming Li, M.A. Washington State University May 2011 Chair: Joan L. Ellis Research has established a relationship between willingness to pay to price premium and brand equity, however, most studies used stated preference data, which are hypothetical situations. Studies using experimental auction methodology to elicit revealed preferences in branded apparel products have been minimal. The purpose of the study was to determine the relationship between brand equity and consumers’ willingness to pay (WTP) a price premium for branded apparel products using revealed preference methodology. In order to determine the relationship, the Becker-Degroot-Marshack (BDM) experimental auction mechanism was used with the endow-and-upgrade approach followed with a survey. The survey includes ten multidimensional brand equity questions adopted from Yoo and Donthu (2001) brand equity scale, demographics, previous brand experiences, importance of apparel product attributes, and beliefs about brands. The experiment resulted in one hundred and three complete observations. Brand equity was analyzed using a composite score on the multidimensional brand equity measurement (Yoo and Donthu, 2001), WTP a price