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.
The authors propose that the revenue premium a brand generates compared with that of a private label product is a simple, objective, and managerially useful product-market measure of brand equity. The authors provide the conceptual basis for the measure, compute it for brands in several packaged goods categories, and test its validity. The empirical analysis shows that the measure is reliable and reflects real changes in brand health over time. It correlates well with other equity measures, and the measure's association with a brand's advertising and promotion activity, price sensitivity, and perceived category risk is consistent with theory.
Does private label use drive store loyalty? This question is important to retailers, as they decide how much to push private labels over national brands, and to national brand manufacturers, as they look for effective ways to both cooperate with and compete with retailers. Yet, empirical evidence of the association between private label use and store loyalty is both limited and mixed. In this study, we develop an econometric model of the relationship between a household's private label share and behavioral store loyalty. The model includes major drivers of these two behaviors and controls for simultaneity and non-linearity in the relationship between them. It is estimated using a unique dataset that combines complete purchase records of a panel of Dutch households with demographic and psychographic data. We estimate the model for two retail chains in the Netherlands-the leading service chain with a well-defined private label strategy and higher private label share and the leading value chain with lower private label share. We find that private label share significantly affects all three measures of behavioral loyalty in our study, share of wallet, share of items purchased, and share of shopping trips. And, behavioral loyalty also has a significant effect on private label share. For the service chain, we find that both effects are strongly non-monotonic in the form of an inverted U. For the value chain, the effects are positive and non-linear but do not exhibit non-monotonicity because private label share has not yet reached high enough levels. The managerial implications of this research are very important. Retailers can reap the benefits of a virtuous cyclegreater private label share increases share of wallet and greater share of wallet increases private label share. But, this virtuous cycle only operates to a point, as heavy private label buyers tend to be loyal to price savings and private labels in general, rather than to the private label of any particular chain.
The authors develop and test a model of the key determinants of margins that retailers earn on national brands and store brands. They particularly focus on the impact of store-brand share on percentage margin, dollar margin per unit, and total dollar margin of the retailer. The authors find not only that percentage retail margins on store brands are higher than on national brands but also that high store-brand share enables retailers to earn higher percentage margins on national brands. However, the dollar margin per unit may be smaller for store brands because of their lower retail price. Furthermore, heavy store-brand users contribute much less to the total dollar profit of the retailer than do light store-brand users. The authors conclude that it is important for retailers to retain a balance between store brands and national brands to attract and retain the most profitable customers.
Brand equity is the differential preference and response to marketing effort that a product obtains because of its brand identification. Brand equity can be measured using either consumer perceptions or sales. Consumer-based brand equity (CBBE) measures what consumers think and feel about the brand, whereas sales-based brand equity (SBBE) is the brand intercept in a choice or market share model. This article studies the extent to which CBBE manifests itself in SBBE and marketing-mix response using ten years of IRI scanner and Brand Asset Valuator data for 290 brands spanning 25 packaged good categories. The authors uncover a fairly strong positive association of SBBE with three dimensions of CBBE—relevance, esteem, and knowledge—but a slight negative correspondence with the fourth dimension, energized differentiation. They also reveal new insights on the category characteristics that moderate the CBBE–SBBE relationship and document a more nuanced association of the CBBE dimensions with response to the major marketing-mix variables than heretofore assumed. The authors discuss implications for academic researchers who predict and test the impact of brand equity, for market researchers who measure it, and for marketers who want to translate their brand equity into marketplace success.
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