Proliferating private label portfolios

How introducing economy and premium private labels influences brand choice

I. Geyskens, K.J.P. Gielens, E. Gijsbrechts

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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.
Original languageEnglish
Pages (from-to)791-807
JournalJournal of Marketing Research
Volume47
Issue number5
Publication statusPublished - 2010

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Private labels
Brand choice
Premium
National brands
Retailers
Compromise
Corn
Portfolio strategy
Attraction effect
Brand choice models
Context effects
Assortment
Natural experiment
Incumbents
Quality standards

Cite this

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title = "Proliferating private label portfolios: How introducing economy and premium private labels influences brand choice",
abstract = "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.",
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Proliferating private label portfolios : How introducing economy and premium private labels influences brand choice. / Geyskens, I.; Gielens, K.J.P.; Gijsbrechts, E.

In: Journal of Marketing Research, Vol. 47, No. 5, 2010, p. 791-807.

Research output: Contribution to journalArticleScientificpeer-review

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