- Cosmetic product and fitness medicine are the examples of
brand name effect.
- Brand name usually associates with
constantly high quality (in terms of the distinctive results after
using the product).
- This will help to reduce the information cost
of consumers, as they can save the cost of seeking prepurchase
information, eg. quality of the good.
- with the reduction of the information cost,
consumers are more willing to pay higher price for the product(¡îgreat
saving of info. cost).
- Increasing in the sales of product will then
be resulted, as the consumer are better informed with the quality of
product.
- Because of the saving in search cost, producer may also charge a higher selling price to increase the total revenue without lowering the quantity demanded. Since the rise in price can be covered by the saving of information cost.
