Premium Private Labels Products: Drivers of Consumers’ Intention to Buy

In the last years, there has been a proliferation of Private Labels (PLs) and a strategic change in the way retailers conceive and manage this kind of tool. From an instrument devoted to underline the price convenience orientation of retailers, today PLs are articulated in different tiers (economy, standard and premium) and have become a tool to give a good quality option to customers, improving their loyalty and differentiating from competitors. In this context, the paper focuses on a specific PLs tier, Premium Private Labels (PPLs), given the high growth rates, current and perspective, they present. Specifically, the study aims at investigating the drivers of PPLs consumer buying intention. Results derived by the Structural Equation Model employed on a dataset of 211 questionnaires collected by administering a survey on a sample of actual buyers of PPL products show that perceived product quality, label consciousness and the PPL familiarity exert a positive impact on attitude towards PPL products. Conversely, retail customers do not choose a PPL product to conform to others. Moreover, although the increasing extension of the PPL assortment with Geographical Indications, no significant effect was found between the PPLs products branded with a PDO/PGI (Protected Designation of Origin/Protected Geographical Indication) label and attitude towards PPLs. Finally, findings show that the higher the level of consumer familiarity to the PPL, the higher the intention to buy PPL products. These results offer relevant implications from a marketing and strategical viewpoint, providing valuable insights for practitioners and scholars

National and Store Brand Advertising Strategies

As the propensity of premium store brands (SBs) increases, retailers must consider different ways to drive sales besides promotional strategies. With this in mind, we consider a national brand (NB) and a (premium) SB co-existing in a market. Each brand has to decide the amount to invest in advertising its product and the prices to charge its customers, which can be determined separately or in unison. When either advertising expenditures or pricing decisions are set, each brand must keep in mind that the advertising efforts and revenue may spillover between the two brands, customers who intend to purchase the NB may end up purchasing the SB and vice versa. We derive an analytical model of the situations described and characterize equilibrium advertising decisions. We find that the characteristics of a premium SB may depend on which marketing/promoting instrument (advertising or pricing) is the primary method for driving demand; and in some situations an NB may be better off to not advertise at all and instead let the premium SB carry out all of the advertising

A new era in retail:Private-label production by national-brand manufacturers and premium-quality private labels

Private labels have witnessed considerable growth in grocery retailing. While existing academic studies have provided valuable insights concerning the evolution of private labels, several issues remain largely unexplored. First, in the face of these large private-label volumes, private-label production opportunities arise. Due to increased private-label competition, national-brand manufacturers increasingly pursue a dual-branding strategy and engage in private-label production next to their national-brand activities. In chapter two of this dissertation, a major motivation for national-brand manufacturers to engage in private-label production, namely whether it creates retailer goodwill, is investigated. It shows that private-label production is indeed rewarded: national-brand manufacturers involved in private-label production for a discounter have a higher likelihood of obtaining national-brand shelf presence at that discounter. The third chapter focuses on one of the main reasons why retailers push private labels, i.e. because they generate high margins, and considers how a retailer’s private-label margins vary within categories. It demonstrates that a retailer’s private-label margins depend on the nature of the private-label supplier-retailer relationship, that they differ across quality tiers and package sizes, and that they are affected by a supplier’s extent of national-brand focus next to its private-label production for the retailer. Finally, this dissertation concentrates on the recent premium private-label trend. Even though premium private labels are seen as “one of the hottest trends in retailing,” retailers are selective in picking their battles with top-quality national brands and do not feel the need to extend their standard private label with a premium private label in every category. The fourth chapter provides insight into why retailers offer premium private labels in some categories, but not in others. The research presented in this dissertation is among the first to empirically investigate the phenomenon of private-label production, and to shed light on the recent trend of premium private labels

A new era in retail: Private-label production by national-brand manufacturers and premium-quality private labels.

Private labels have witnessed considerable growth in grocery retailing. While existing academic studies have provided valuable insights concerning the evolution of private labels, several issues remain largely unexplored. First, in the face of these large private-label volumes, private-label production opportunities arise. Due to increased private-label competition, national-brand manufacturers increasingly pursue a dual-branding strategy and engage in private-label production next to their national-brand activities. In chapter two of this dissertation, a major motivation for national-brand manufacturers to engage in private-label production, namely whether it creates retailer goodwill, is investigated. It shows that private-label production is indeed rewarded: national-brand manufacturers involved in private-label production for a discounter have a higher likelihood of obtaining national-brand shelf presence at that discounter. The third chapter focuses on one of the main reasons why retailers push private labels, i.e. because they generate high margins, and considers how a retailer’s private-label margins vary within categories. It demonstrates that a retailer’s private-label margins depend on the nature of the private-label supplier-retailer relationship, that they differ across quality tiers and package sizes, and that they are affected by a supplier’s extent of national-brand focus next to its private-label production for the retailer. Finally, this dissertation concentrates on the recent premium private-label trend. Even though premium private labels are seen as “one of the hottest trends in retailing,” retailers are selective in picking their battles with top-quality national brands and do not feel the need to extend their standard private label with a premium private label in every category. The fourth chapter provides insight into why retailers offer premium private labels in some categories, but not in others. The research presented in this dissertation is among the first to empirically investigate the phenomenon of private-label production, and to shed light on the recent trend of premium private labels.

Do Retailers Manipulate Prices to Favour Private Label over Brands?

Retailers act as both customers and competitors for brand manufacturers when selling private label in direct competition with brands. This paper considers whether retailers exploit this double-agent position to practice switch marketing, manipulating elements of the retail marketing mix to encourage shoppers to switch from buying brands to private label. Such manipulation can be blatant in nature, such as comparative advertising, brand delisting trials, copycat packaging, and biased shelf allocation. However, the key interest in this paper concerns whether retailers use a more subtle means through strategic pricing to favour private label over brands. The paper reveals very different price treatments of brands and matching private label goods. However, the identified pricing patterns are more indicative of retailers manipulating prices for the sake of segmenting consumers rather than displacing brands

Marketing strategy and supply chain relations in grocery retailing

This submission for PhD by publication consists of a portfolio of nine peer reviewed and published papers. The research presented in the portfolio contributes to theory, knowledge and discussion in the area of retail marketing. The common theme of the papers is competition in grocery retailing, and specifically the way that retail marketing strategy and supply chain relations affects retail competition and outcomes for consumers. While the nine papers share a common approach in how grocery retailers compete through pricing and product choices along with their trading terms with suppliers, each individual paper addresses a distinctive central question: How does pricing competition change in the wake of a major merger in the retail grocery sector? How do grocery retailers respond in their pricing, promotion and advertising to the onset of a macro-economic crisis? Do grocery retailers encourage excessive consumption of alcohol by under-shifting excise duty increases on cheap alcohol? Why do retailers use value size pricing and offer bargain prices on jumbo-sized sugary drinks that encourages harmful excessive consumption? Is retail buyer power over suppliers detrimental to competition? In what circumstances might the development and promotion of brands and private labels be deleterious to consumers interests? How should competition authorities and practitioners assess the extent of competition between brands and private labels? How can the development of copycat private labels directly mimicking leading brands result in higher overall prices for consumers? Do retailers manipulate grocery prices to favour private labels over brands? Beyond their academic research contribution, the findings and insights provided in the papers both individually and collectively have relevance to retailers, suppliers, consumers, regulators and policymakers in desiring to see an efficient, well-functioning and dynamic grocery retail sector

Assessing the External Validity of Analytical Results from National Brand and Store Brand Competition Models

This research has three objectives: (i) to compile analytical results on national brand and store brand marketing obtained from mathematical models, (ii) to assess the external validity of those results and thus the applicability of the results to practice, and (iii) to identify avenues for further research on national brand and store brand competition. A total of 44 analytical results (29 related to retailer strategies and 15 related to manufacturer strategies) are compiled from a survey of literature published between 1966 and 2006. Three criteria are then used to assess the external validity of these results—robustness (R), empirical support (E), and credibility (C) (collectively, REC). Each result is quantitatively assessed (scored) using these three criteria. Robustness is measured as the total number of relevant market conditions for which the result has been shown to hold. Empirical support is measured as the number of independent empirical studies in which the findings are consistent with the analytical result. Credibility is measured as the believability of the theoretical result as perceived by experienced brand managers and retail executives. Thus, the REC scoring approach represents a triangulation of perspectives—robustness (modeler perspective), empirical support (empiricist perspective), and credibility (managerial perspective). In particular, this research serves in part as a bridge between scholars and practitioners in the context of national brand and store brand marketing.private labels, store brands, competitive strategies, mathematical models, marketing generalizations

Consumer Buying Criteria for National and Premium Own-label Food Brands

Since its introduction, the premium own label range has become the fastest growing of the own label tiers available in supermarkets in spite of its high price. Accordingly, the question of who buys the premium own label and why attracted the interest of the researcher, especially when the growth of this new tier seem to be out-performing national brands. Using choice determinants common to earlier generations of own label brands, this study examined whether factors common to the first and third generations of own labels, are also influential to the purchase of the premium own label. The study also investigated the demographic characteristic of the premium own label shopper. With the premium own label range positioned to compete directly with national brands in terms of price and quality, it was also imperative that a comparative study be carried out on the factors influencing consumer purchase of premium own label and national brands. In order to test hypotheses developed for the study, five demographic variables - gender, age, educational qualification, income and family size - were employed. Self-administered questionnaires were distributed to shoppers as they existed leading supermarkets in London and a total of 266 questionnaires were completed. The result indicated that gender, education and income could be used to profile the premium own label buyers, while household size gave inconclusive results. The typical premium own label consumers were found to be men. Other characteristics of the premium own label buyer included the fact that they were aged above 46 years, had university degrees or professional qualifications, and were not financially constrained. With regards to the choice criteria examined, only quality and taste were found to be common to the success of earlier generations of own label and the premium own label. It was also found that though taste, quality and brand name influenced the purchase of premium own labels and national brands, they were more important for national brands than premium own label brands. Finally, whilst the premium own label brand was purchased by specific demographic groups, national brand appealed to all consumers

The impact of labels on the competitiveness of the European food label supply chain

The report studies the impact of private labels on the competitiveness of the European food processing industry and investigates whether a system of producer indication may improve the functioning of the food supply chain. The impact is studied using economic theory and empirical and legal analysis. The study is completed with an impact assessment

How Do National Brands and Store Brands Compete?:Centre for Competition Policy Working Paper 14-7

This paper considers the nature of competition between national brands and store brands (otherwise known as private label or own label goods). We expound an analytical framework that allows for both price and non-price (quality) competition and use this to see how these different forms of rivalry interact in a setting where a leading retailer offering a store brand acts as both a customer and competitor to a national brand producer. This relationship thus entails both vertical and horizontal competition. We show that generally the retailer will seek to position its store brand as closely as possible to the national brand, by seeking to minimise the quality gap, but price the two goods very differently, with a wide price gap, as a means to segment consumers. Store brand introduction can lead to overall higher prices, so be against consumers’ interest, unless there is intense head-to-head rivalry for value-conscious consumers. Intense rivalry is more likely to happen if the national brand producer can exercise some control over its own product’s retail price (e.g. by being allowed to use maximum resale price maintenance) and has protection against copycat (lookalike) store brands ensuring a degree of differentiation between the competing products. Accordingly, we suggest that there are horizontal competition benefits on top of the usual vertical (alleviating double marginalisation) and intellectual property (to encourage brand investments) reasons to support respectively a more lenient policy stance towards RPM and a tougher stance against parasitic copycatting. The mix of horizontal and vertical aspects has important implications for undertaking market definition analysis in CPG markets, and specifically testing whether store brands and national brands are in the same product market. We highlight the considerable care needed in applying and interpreting the usual price and demand elasticity analysis used in market definition tests because of how segmentation and item-by-item retail pricing can distort demand and sales patterns