The Impact of Brand Diversity on Demand and Welfare of Cheese Consumers of Kaleh and Pegah Companies (Case Study: Mashhad County)

One of the main objectives of brands in the market is to preserve and develop market share that brand diversity can play significant role in this regard. Diversification in companies should be performed based on recognizing the consumers’ needs and increased social welfare of them. In this study, diversity, price, and preferred value of Kaleh and Pegah brands of cheese in Mashhad market were estimated using data of Naushad project and Pegah Milk Industry (including 425 food stores in 2014) and using seemingly unrelated regression system in the form of four scenarios. Then, changes in consumer surplus, and social welfare and profit per one unit increase in diversity of each brand have been calculated. The results showed that in the first scenario, increasing the the price of Kaleh brand compared to Pegah brand caused reduction in change of consumer surplus for Kaleh brand, increasing the profit of food stores and reducing the social welfare surplus. The second scenario showed that reducing the price of Kaleh brand compared to Pegah brand leads respectively to increase change in consumer surplus, reducing the profit changes for Kaleh brand and increased social welfare. In the third scenario, change in consumer surplus reduces per one unit increase in Pegah brand diversity. Also in third scenario, profit changes increases per one unit of increase in diversity of Pegah brand. In the fourth scenario, per one unit increase in the diversity of the Pegah brand leads to a slightly change in consumer surplus of the Pegah brand. In the fourth scenario, the change in profit per unit increase in the diversity of Pegah brands decreases and leads to a slight decline in social welfare. Based on the results of this study, it can be said that the time of diversification of Kaleh brand increases the social welfare, which, with an increase in the diversity of Kaleh brand, does not increase the price of Kaleh brand compared to Pegah brand.