Pricing and Quality Decisions of Follower Brands in Presence of Brand Loyalty

International famous fashion brands usually attract and cultivate many loyal customers with their high quality and unique cultural value. Thus, domestic follower brands have to be confronted with the effect of customer stickiness and strategic behavior. How to break through the existing barriers and attract strategic customers to buy cost-effective follower brands has become an important issue. On the basis of the assumption that fashion products have certain value depreciation, a strategic game model of competitive firms in two-period, is built to analyze how follower businesses decide their product quality and price. It is found that high brand loyalty is benefit to the leader demand, but may be adverse to its profit. Furthermore, given the value depreciation, if the strategic behavior is weak, the followers’ profit may increase with the brand loyalty. The reason is that the positive effect of follower price increasing with customer loyalty is greater than the negative effect of market demand decreasing with it, which promotes the increase of follower brand profit. In addition, a follower’s profit does not monotonically increase with its product similarity; thus it is essential for a follower to own a certain degree of brand originality in order to maximize profits.