The impact of national brand introductions on hard-discounter image and share-of-wallet

C.J. Lourenco, E. Gijsbrechts

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Hard-discounters (HDs) such as Aldi and Lidl are increasingly introducing national brands (NBs) into their private label (PL) dominated assortments. While there is evidence that this enhances sales in the categories where such NBs are added, little is known about how it affects consumers' overall perceptions of the HD and consequently its share of the customers' wallet. Using a unique data set that combines longitudinal information on a HD's perceptions, with that chain's assortment composition, we investigate the impact of NB introductions on the chain's overall value and assortment image, and spending share.

We show that introductions of NBs, in particular category leaders, may significantly contribute to a more favorable perception of the HD store. For positive value-image effects to materialize, HDs must offer these NBs at low-enough prices to maintain a reasonable price gap with the current private label offer. For the NB entry to enhance the HD's assortment perception, it must come with a sufficiently deep product line.

However, there are limits to this approach. Introductions gradually lose effect as the share of NBs at the HD goes up. More importantly, ill-selected NB additions may backfire on the HD. Listing NBs that are not category-leaders, at prices too far above its private labels, deteriorates the HD's favorable value positioning — cutting into its core competitive advantage, and leading to notable reductions in share-of-wallet. We discuss the academic and managerial implications of these findings.
Original languageEnglish
Pages (from-to)368-382
JournalInternational Journal of Research in Marketing
Volume30
Issue number4
DOIs
Publication statusPublished - 2013

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Share of wallet
National brands
Assortment
Private labels
Competitive advantage
Positioning
Value chain
Consumer perceptions
Product line

Cite this

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title = "The impact of national brand introductions on hard-discounter image and share-of-wallet",
abstract = "Hard-discounters (HDs) such as Aldi and Lidl are increasingly introducing national brands (NBs) into their private label (PL) dominated assortments. While there is evidence that this enhances sales in the categories where such NBs are added, little is known about how it affects consumers' overall perceptions of the HD and consequently its share of the customers' wallet. Using a unique data set that combines longitudinal information on a HD's perceptions, with that chain's assortment composition, we investigate the impact of NB introductions on the chain's overall value and assortment image, and spending share.We show that introductions of NBs, in particular category leaders, may significantly contribute to a more favorable perception of the HD store. For positive value-image effects to materialize, HDs must offer these NBs at low-enough prices to maintain a reasonable price gap with the current private label offer. For the NB entry to enhance the HD's assortment perception, it must come with a sufficiently deep product line.However, there are limits to this approach. Introductions gradually lose effect as the share of NBs at the HD goes up. More importantly, ill-selected NB additions may backfire on the HD. Listing NBs that are not category-leaders, at prices too far above its private labels, deteriorates the HD's favorable value positioning — cutting into its core competitive advantage, and leading to notable reductions in share-of-wallet. We discuss the academic and managerial implications of these findings.",
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The impact of national brand introductions on hard-discounter image and share-of-wallet. / Lourenco, C.J.; Gijsbrechts, E.

In: International Journal of Research in Marketing, Vol. 30, No. 4, 2013, p. 368-382.

Research output: Contribution to journalArticleScientificpeer-review

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