Vitamin Consumption Behavior across Socioeconomic Groups for National Brands and Private Labels

Purpose The evolution of private labels (PL) is a recent trend in the retail industry: many retailers now manage a PL portfolio that includes multiple value propositions, as well as various brand name strategies. Little research has been done, however, on how this combination of PL strategies conditions the results of the retailer that manages them. This study aims to examine the formation of PL brand equity and its effect on store loyalty for retailers with differently tiered PL programs (a “better” program with standard PL vs a full PL quality spectrum with economy, standard and premium PLs) and different PL naming strategies (store-banner name or stand-alone brand name). Design/methodology/approach A survey (N = 644) was used to test the model in the context of the consumer goods retail industry. Exploratory factor analysis, confirmatory factor analysis and multi-group structural equation modelling techniques were used to assess the proposed model. Findings The results show differences in the formation of PL loyalty based on whether the retailer has a tiered PL program. In portfolios with economy, standard and premium PLs, PL associations have a stronger effect than PL awareness in the formation of PL loyalty. Portfolios with a standard PL show balanced effects of PL associations and PL awareness on PL loyalty formation. As to the positive effect of PL brand equity on store loyalty, this study also shows a stronger effect of PL brand equity on store loyalty in chains that choose to use their store banner name in their PLs. Practical implications Retailers that manage multi-tier PL portfolios (as opposed to those that commercialise a standard PL) can increase loyalty to the PL portfolio significantly by constructing highly differentiated images of their economy, standard and premium PLs to ensure that consumers truly perceive the different value propositions of their PL tiers. As to PL naming strategy, the authors recommend that retailers that use the same retail chain name for one or several of their PLs invest in their corporate reputation to strengthen the brand equity achieved by their PLs and thus increase loyalty to the retail chain. Retailers must perform specific communication and advertising campaigns for PLs with the stand-alone brand name. Originality/value Today, any reference to PLs as a whole is overly simplistic, but no research has assessed empirically differences in the influences of a multi-tiered vs a standard PL program on the PL loyalty formation for PL portfolios. Nor has any empirical research incorporated the influence of PL naming strategy on store loyalty. This study fills these gaps, integrating into the same model two significant moderating variables of retailers’ strategy: their PL tier strategy and their PL naming strategy.

PurposeThis study aims to investigate the impact of social risk and inter-tier brand competition across traditional retailers and discounters on consumers' purchase intentions in the UK.Design/methodology/approachThe authors conduct a 2 (social risk) × 3 (brand type) × 2 (retailer type) between-subjects design (n = 309; UK) experiment employing a Qualtrics online panel in the UK.FindingsThe study shows that while premium private labels (PPLs) are on par with national brands, discounter's PPLs outperform mainstream retailer's PPLs. Furthermore, consumers appear to purchase standard private labels and PPLs for themselves when shopping at a discounter but turn to national brands when shopping for socially risky situations.Research limitations/implicationsWhile Tesco's premium (Tesco Finest*) and standard private label (Tesco Everyday Value) explicitly make reference to the retailer's name, for Lidl's premium (Deluxe) and standard private label (e.g. Milbona), the discounter's name is not visible. This is something this study did not control for.Practical implicationsGiven that Lidl has opened its first US store in 2017 with ambitious expansion plans, our findings provide in particular practical guidelines for how to promote PPLs in countries where the discounter landscape is less saturated than in Germany.Originality/valueThis study provides insights into the understanding of the influence of social risk on purchasing intentions of premium private labels vs standard private labels vs national brands offered by mainstream retailers or discounters in the UK.

PurposeThe purpose of this paper is to examine the moderating effect of brand preference and type of shopping trip on the relationship between replacing a delisted national brand (NB) with a retailer’s private label (PL) brand (premium vs standard) and private label switching (PLS), that is switching from NB to PL.Design/methodology/approachInside a major French retail chain store, an experiment with 1,392 NB buyers tested the impact of replacing NB with PL on PLS.FindingsResults stress the positive contribution of PL replacements after NB delisting on buyers’ switching behaviour at different brand preference levels and shopping trip types. A main-choice NB for a major trip shopping benefits a PLS to premium PL. However, when a fill-in shopper looks for a secondary brand, competition between PL standard and NB may not be as weak as suggested in earlier studies.Research limitations/implicationsThe limitation of this study is that respondents reported their purchases instead of actually buying.Practical implicationsThis study highlights that the retailers that delist some NB brands in the category should adopt a strategy either to develop premium or standard PLs, depending on consumers’ brand preference and shopping trip type.Social implicationsDelisting is an opportunity to question the NB product competitiveness towards PL.Originality/valueThe study is based on actual delisting and replacement, combined with a large sample, unlike previous studies. Moreover, it bridges two important areas of research: conflict in marketing channels and PL introduction in retailers’ assortment decisions.

As private labels (PLs) continue to grow in power and market share, product innovation has become one of the strongest weapons in the national brand (NB) manufacturer's arsenal. In this article, the author assesses when and to what extent new products change NBs' market position. To address this question, more than 300 NB and PL introductions are analyzed using a multibreak model that quantifies the impact of product introductions on own share, rival NB and PL share, and category sales. Drawing on empirical generalizations, the author finds that products introduced by leading NBs, standard PLs, and premium PLs are more likely to increase category sales than products introduced by follower NBs or economy PLs. New products introduced by leader and follower NBs more often boost own share. Thus, new products help prevent the decline of NB shares. With respect to competitive impact, new products affect rival shares, with the exception of those launched by economy PLs. Still, NBs tend to hurt rival NBs more often than PLs, and only the leading NB is likely to steal share from all three PL tiers. Moreover, standard PLs tend to be harmed less often by rival new products, unless introduced by the leading NB. Overall, PLs are more likely to be affected by a NB that maintains a large price gap and offers new products with new intrinsic or usage benefits. To fight economy PLs successfully, however, NBs must maintain a smaller price gap, while offering products that focus less on intrinsic and usage benefits.

Retailers wish to expand their standard private label (PL) adopting a multi-tiered portfolio. We study the effects produced by the introduction of two new PLs quality-tiers (economy and premium) on the market share of various national brands (NB; premium-quality and second-tier) and the standard PL. This study proposes a model that accommodates three effects (similarity, attraction, and compromise) for understanding how the introduction of economy and premium PL may affect market incumbents. This study also analyzes the effects of introducing new PL quality-tiers for customer segments. Our results indicate that when economy and premium PL are introduced in the market, the choice probability of standard PL decreases, especially for high purchase quantity customers and PL loyal customers. In addition, introduction of a premium PL decreases the choice probability of second-tier NB and premium-quality NB, especially for PL loyal customers and high purchase quantity customers.

Standard private labels (PLs) have been the topic of multiple prior reviews. Having been leapfrogged by business practice, the marketing literature has only recently witnessed a surge in interest in multi-tier PL offerings. These typically include a budget and/or premium tier in addition to the omnipresent standard PL tier. This study offers a systematic review of recent empirical findings on budget and premium PLs. Our review is structured along the following four research questions: (i) why do retailers introduce budget and premium PLs, (ii) who buys budget and premium PLs, (iii) what is the nature of the competition among the different tiers and with national brands, and (iv) what are the budget and premium PL tiers’ respective success drivers? While standard PLs still generate the largest volume sales, premium PLs (which are not only characterized by a higher dollar margin but which are also most beneficial to the retailer's image) are currently driving PL growth. Budget PLs, in contrast, are hardly growing in volume share, have a lower absolute and percentage margin, and are found to be less effective in fighting discounters than initially thought. We identify some commonalities across the different tiers but also report on many differences. Various avenues for future research are presented.

The battle of traditional retailers versus discounters: The role of PL tiers

Three-tiered private-label (PL) portfolio strategies (low-quality tier: economy PLs, mid-quality tier: standard PLs, and top-quality tier: premium PLs) are gaining interest around the world. Drawing on the context-effects literature, the authors postulate how the introduction of economy and premium PLs may affect the choice of mainstream-quality and premium-quality national brands (NBs) and the choice of the retailer's existing PL offering. The authors use the natural experiment offered by Asda's and Sainsbury's introduction of economy and premium PL tiers in the corn flakes and canned soup categories in the United Kingdom to test their framework. Using brand choice models that accommodate context (compromise, similarity, and attraction) effects, the authors find that both economy and premium PLs cannibalize incumbent PLs. Economy PL introductions benefit mainstream-quality NBs because these NBs become a compromise or middle option in terms of quality in the retailer's assortment. The effects of premium PL introductions on premium-quality NBs are mixed: Their share improves in two of four cases but decreases in the other two cases.

PurposeThis paper aims to describe and understand the offer of premium private labels (PPLs) in Italy, with a case study on the extra virgin olive oil (EVOO).Design/methodology/approachThe empirical study on EVOO in Italy was aimed to investigate the drivers of the offer of PPLs and its effects on assortment policies. The study was carried out in three Italian provinces, using a cross-sectional design with data collected through direct observation. A two-step data analysis was performed. First, descriptive statistics were used to preliminary appraise hypotheses on the rationale underlying the offer of PPL, and then, the drivers of PPL policy were studied using a logistic regression model.FindingsThe estimated model indicates that in the case of EVOO the probability of offering a PPL is higher for stronger with a stronger competitive position (with respect to other stores), and increases with the size of the category assortment (Total Assortment Width) and with the share of the PL products offered by the store (PL Assortment Index). It also increases if the average price (Total Average Price) and the average price of the standard private label (SPL Average Price) improve; by contrast, it decreases if the national brand (NB) share in the assortment (NB Assortment Index) augments.Research limitations/implicationsOverall, the study confirms that the multi-tiered PL strategy is one of the current competitive strategies of top retailers, centred more on a differentiation than on a low cost/price policy. Such a differentiation policy may have various effects in terms of channel structure and social welfare depending on the underlying corporate and consumer goals and beliefs and on the existing institutional framework.Originality/valueThis is the first study to investigate the PPL market in Italy using original data and taking into account policies actually carried out at the individual store level. A further element of novelty is the attention given to the welfare effects of multi-tier strategies. This paper suggests that these latter may have various effects in terms of channel structure and social welfare depending on the underlying corporate and consumer goals and beliefs and on the existing institutional framework.

Purpose This paper aims to understand empirically how shares of standard and premium private label (PL) products affect a retailer’s marketing mix decisions toward national brands (NBs). Design/methodology/approach Using a comprehensive store-level data set covering 52 categories and 130 stores of two retailer chains during 2003-2009, this paper examines how shares of standard and premium PLs affect retailer marketing strategies for NB retail prices, promotions and product assortments. The empirical analysis uses a simultaneous equations model estimated by the generalized method of moments approach and controls for endogeneity between PL shares and NB decisions and potential confounding variables including consumer, manufacturer and retailer factors. Findings Standard PL shares are associated positively with NB retail prices and negatively with NB promotions and assortments. In contrast, premium PL shares are associated positively with NB retail prices, promotions and assortments. Research limitations/implications The results indicate that retailers make strategic NB decisions through multitier PLs. Specifically, the evidence suggests that retailers use standard and premium PLs differently in promotion and assortment decisions toward NBs. NB manufacturers need to be cognizant of the increasing marketing power of retailers through their multitier PLs. Originality/value Prior research has mainly focused on the role of PLs as a strategic weapon to gain power in the channel and its impact on NB pricing decisions in a single PL context. After accounting for potential confounding factors (retailer, consumer and manufacturer) and endogeneity, the authors find empirical evidence that retailers appear to leverage standard and premium PLs differently in some marketing mix decisions toward NB. In particular, the results reveal PL performance to be a determinant of retailer NB assortment decisions.

Private label line proliferation and private label tier pricing: A new dimension of competition between private labels and national brands

The authors show how new realities in the private-label (PL) landscape, including differential PL-sourcing relationships and differentiated, three-tiered PL portfolios, affect the gross margins that retailers realize on their PLs. In addition, they examine the moderating role of the identity of the PL supplier (dual brander vs. dedicated supplier). Retailer PL margins are lower for stockkeeping units from PL suppliers with whom the retailer shares a more intense relationship, as reflected in their relationship breadth and depth, but this negative effect can be countered through multisourcing. Building prolonged relationships with PL suppliers also results in lower retailer PL margins, but only for more national brand–oriented suppliers. Dedicated PL suppliers have little to gain by building long-term retailer relationships, but they are less vulnerable to the retailer's practice of multisourcing than dual branders. Although economy PLs may appeal to conventional supermarkets to keep (hard) discounters at bay, they result in lower margins (percentage-wise and absolute) than the standard PLs they cannibalize. Premium PLs, in turn, offer the retailer a higher margin, but only when produced by suppliers with a sufficient extent of national brand focus. However, the higher promotional support often given to premium PLs tends to mitigate the actual margin advantage.

CO-BRANDING BETWEEN PRIVATE LABELS AND NATIONAL BRANDS: DOES A CO-BRANDING STRATEGY IMPROVE CONSUMERS’ ATTITUDES TOWARD PRIVATE LABELS IN JAPAN?

The latest trend in the private label world are premium private labels, often more expensive than standard national brands (ter Braak, Geyskens, & Dekimpe, 2014). The question arises, are those who are already buying a lot of private labels a potential target for more expensive private labels? This paper aims to answer this question by examining the relationship between the loyalty to private labels and national brands and the average price paid. We utilized the UK Kantar TNS panel data and looked at purchasing of ten product categories between 2008 and 2012. The findings show that the higher the loyalty to private labels the lower the average price paid for private labels. In contrast, the more loyal consumers are to national brand the higher the average price paid for national brands. The findings provide important implications for retailers wanting to target shoppers with their premium private label offers in different categories.KeywordsPrivate labelsLoyaltyPricingPremium private labels

An evolutionary game theoretic model for analyzing retailers’ behavior when introducing economy and premium private labels