Are Consumers more Loyal to National Brands than to Private Labels?

Abstract

The evolution of private labels (PLs) can be understood in terms of a strategy adopted by the retail industry with the aim of competing with national brands (NBs). In the 1990s, this strategy led to the development of “me too” products, which currently represent the largest share of store brand products. Since the early 2000s, retailers have widened the range of their store brands by introducing high-quality products. The aim of this study is to estimate consumers’ attachment to “me-too” and niche PLs respectively, as compared to NBs. We capture the degree of maturity of these PLs through their price-elasticities, computed for three staple goods offered by three mass retail companies. Our first finding is that price sensitivity does not differ much between the “me-too” PLs and the corresponding NBs. This result confirms that “me-too” products are now considered reliable quality brands. However, in the high quality segment, consumers remain more sensitive to the price of PLs than that of NBs, a characteristic which may relate to their recent introduction on the market.

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Replaces

Fabian Bergès, Daniel Hassan, and Sylvette Monier-Dilhan, “Are Consumers More Loyal to National Brands than to Private Labels?”, TSE Working Paper, n. 09-131, December 2009.

Reference

Fabian Bergès, Daniel Hassan, and Sylvette Monier-Dilhan, “Are Consumers more Loyal to National Brands than to Private Labels?”, Bulletin of Economic Research, vol. 65, May 2013, pp. 1–16.