Brand Acquisition Discount

Brand Acquisition Discount 

Abstract:
We study the implications of a recent brand acquisition case. Specifically, we investigate the firm-side implications of various consumer-based reactions resulting from the public announcement of the acquisition of the majority stake in a German manufacturer brand, taken by one of the world’s largest multinational food companies. Using data from the field, we analyze consumer reactions in online (e.g., sentiments) and retail outlets (sales). Using a difference in differences approach and synthetic control methods, we find considerable deterioration in consumer reactions (e.g., a sales decrease by about 30%). While demand-side reactions towards brand acquisitions might, upon other terms, be even rather benevolently, we document what we interpret as a brand acquisition discount. Theory-wise, our findings indicate a substantial (i.e., real-world) demand-side reaction to the violation of consumers’ beliefs in the manufacturer brand’s intrinsic motivation (i.e., above profit concern). While our single-case results suggest substantial harm to the acquired brand, we attempt to carefully theorize how the brand signal is transmitted after the acquisition shock. Overall, we confirm prior evidence (from the lab and the study of rating websites) and quantify the extend of consumers’ authenticity discounting. Overall, we suggest a more nuanced view on demand-side reactions for marketing and organization theory.

More information on Christian Schäfer can be found here

The talk will take place in room RuW 1.201 and via Zoom.