A Willingness-To-Pay Study of Basketball Shoes Characteristics－An Application of the Censored Logistic Regression Model
Date Issued
2010
Date
2010
Author(s)
Wu, Yi-Cheng
Abstract
Due to the concept of combining sports and business opportunities, more and more well-known manufacturers of sporting goods provide their main-marketing basketball shoes to the basketball stars. Through the stars’ endorsement and advertisements, the sales and profits of the manufacturers are enhanced. The manufacturers hope to create the sales by star’s endorsement and satisfy the needs of consumers for functional basketball shoes.
This study figures the main characteristics of basketball shoes. More specifically, for the characteristics, how much the willingness to pay for the consumers is. What is the willingness to pay of consumers to the characteristics of basketball shoes? For our analysis, a Hedonic price approach is first adopted as our theoretical basis. Second, the willingness to pay for the characteristics of basketball shoes is estimated by general linear regression model and Censored Logistic Regression Model. Finally, the optimal pricing estimation of the basketball shoes is defined. Results found that the when using general regression model, consumer actually paid for 498.38$ for the Nike brand basketball shoes. Interestingly, using Censored Logistic Regression Model to test the shoes which are exactly the same, the willingness to pay of consumers will decrease 1219.31$ if the Nike brand is instead of other unknown brands. That is, for the same pair of shoes, the willingness to pay of consumers will decrease 1219.31$ if the brand features of Nike brand is removed. There is a 700$ gap between Using Censored Logistic Model and general regression model. The basketball shoes endorsed by Kobe Bryant can actually increase the price of the basketball shoes for 354.77$.Interestingly, using Censored Logistic Regression Model to test the shoes which are exactly the same, the willingness to pay of consumers will decrease 1097.67$ if endorsed by Kobe Bryant is instead of other unknown endorsed. That is, for the same pair of shoes, the willingness to pay of consumers will decrease 1219.31$ if the endorsed features by Kobe Bryant is removed. There is a 700$ gap between Using Censored Logistic Regression Model and general regression model. This gap of 700$ is the consumer surplus. Therefore, Censored Logistic Model is more accurate to estimate the willingness to pay of consumers for the brand and spokesperson.
Subjects
endorsed
brand
basketball shoes
characteristics
Willingness-To-Pay
Type
thesis
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