The objective of this article is to determine whether national brand promotions and store brands attract the same value-conscious consumers, which would aggravate channel conflict between manufacturers and retailers. The authors identify psychographic and demographic traits that potentially drive usage of store brands and national brand promotions. They then develop a framework and structural equation model to study the association of these traits with store brand and national brand promotion usage. The authors find that though demographics do not influence these behaviors directly, they have significant associations with psychographic characteristics and therefore are useful for market targeting. Most important, usage of store brands and usage of promotions, particularly outof-store promotions, are associated with different psychographics. Store brand use correlates mainly with traits related to economic benefits and costs, whereas the use of out-of-store promotions is associated mainly with traits related to hedonic benefits and costs. These differences result in four well-defined and identifiable consumer segments: deal-focused consumers, store brand-focused consumers, deal and store brand users (use-all), and nonusers of both store brands and deals (use-none). Therefore, manufacturers and retailers have the opportunity to either avoid each other or compete head to head, depending on which segment they target.
Promotion-induced consumer stockpiling has a negative impact on manufacturers because it moves forward in time brand sales that would have occurred later at full margin. However, the resultant increase in consumer inventory has two potential benefits: increased category consumption and preemptive brand switches (the additional inventory of the promoted brand preempts the consumer's purchase of a competing brand in the future). Furthermore, there is a potential impact on repeat purchases of the stockpiled brand after the promotion. In this article, the authors present a model and simulation-based method to measure the benefits and costs of stockpiling and assess their relative magnitudes. They find that the benefits are substantial, but consumption appears to be the most important, followed by preemptive switching and then an increase in repeat purchases. These benefits easily offset the negative aspect of consumer stockpiling—namely, purchase acceleration by loyal customers who would have bought the brand at regular price at a later date.
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