TV advertising spillovers and demand for private labels: the case of carbonated soft drinks

Abstract

The expansion of private labels, or store brands, has transformed consumer choice sets and competition in retail markets, prompting manufacturers to fight back with renewed pricing and product and promotion strategies to forestall further private label expansion. This article examines the spillover effects of television advertising on brand-level consumer demand for carbonated soft drinks (CSDs), including private labels, using a random coefficients logit model with household purchasing and advertising viewing Nielsen data. As in previous work, we find that although brand spillover effects significantly increase demand for CSD brands in the same company and undermine demand facing other manufacturers' CSD brands, surprisingly, there are positive spillover effects on the demand for private label brands. This indicates that brand advertising is persuasive with respect to manufacturers' brands but complementary with respect to private labels. Further results show that eliminating television advertising for CSDs would lower aggregate CSD sales as consumers migrate to other beverages, although private labels stand to gain, particularly Wal-Mart brands.

Advances in National Brand and Private Label Marketing

“…On the other hand, according to Lopez et al (2015), manufacturer advertising has spillover effects on the demand for PL brands, increasing their demand by aggregating the demand for the entire category. Therefore, we can assume that advertising lovers, in general, who are exposed to national brand advertising, will buy more from a category including PL products.…”

Effects of local and national advertising across brands: the case of yogurt in China

“…Furthermore, advertising one brand does not necessarily have adverse impact on the demand for other brand, and there may exist positive spillover in advertising for some brands. This seemingly surprising finding is not uncommon for many consumer products (Lopez et al 2015;Shapiro 2018). On the one hand, advertising one brand can have negative impact on the demand for other brands due to competition among these brands.…”

“…This seemingly surprising finding is not uncommon for many consumer products (Lopez et al . 2015; Shapiro 2018). On the one hand, advertising one brand can have negative impact on the demand for other brands due to competition among these brands.…”

Consumer proximity and brand loyalty in craft soda marketing: A case study of Ale‐8‐One

“…A random coefficients logit model (Chintagunta & Dube, 2005) will address product and consumer heterogeneity (Lopez & Fantuzzi, 2012) when applied to a panel of household data. Discrete choice estimation approach is particularly appropriate when the outcome variable is a categorical variable—the observed choice among alternatives—and the goal is to integrate measures such as consumer loyalty to the model (Lopez & Fantuzzi, 2012; Lopez, Liu, & Zhu, 2015).…”