A cross-category and cross-country analysis of umbrella branding for national and store brands

Abstract

The large penetration of store brands has been accelerated by a substantial increase of their availability across various categories. Although store brands have generated tremendous interest in the literature, little work has been done on umbrella branding strategies for store brands. We extend the previous work of Erdem (1998) andErdem et al. (2004) by studying the learning spillover effects of umbrella brands across categories for both national and store brands. We apply the Multivariate Multinomial Probit Model of crosscategory learning across five product categories to study differences across store versus national umbrella brands in three countries (i.e., the United States, the United Kingdom, and Spain). Our results indicate that cross-category learning effects exist between different product categories in consumer packaged goods for both store brands and national umbrella brands, although some of the categories in which correlated learning happens differ between the two. The degree of crosscategory learning also varies across categories.Keywords Brand choice . Store brands . Umbrella branding A substantial increase in the availability of store brands across various categories and the expectation that recessionary trends often involve a shift toward store brands have renewed scholarly interest in understanding consumer behavior related to store brands. Despite the breadth of the literature on store brands (e.g., Batra and Sinha 2000;Dhar and Hoch 1997;Sethuraman 1992), little research has been done on umbrella branding in the context of store brands. Most previous research has concentrated on the umbrella branding of national brands rather than store brands. For example, Erdem (1998) demonstrated how consumers may learn about national umbrella brands through their user experiences across categories. Erdem et al. (2004) further estimated a learning model to explain differential market shares for store brands in the United States versus those in Europe; however, they did not explore any cross-category learning effects.The purpose of this work is to extend previous work by Erdem (1998) andErdem et al. (2004) to study the learning spillover effects of umbrella brands across multiple categories for both national and store brands. For this purpose, we apply the Multivariate Multinomial Probit Model of crosscategory learning, which allows for simultaneous and interdependent choice of different brands across categories. To the best of our knowledge, our model is the first Multivariate Multinomial Probit Model (MVMNP) with learning (previous learning models assumed the multinomial logit (MNL)). In addition, we repeat the analysis in three countries: the United States, the United Kingdom, and Spain. Our results indicate that cross-category learning effects exist between several pairs of categories for both store and national umbrella brands, although some of the categories in which correlated learning happens differ between store and national umbrella brands. The degree of cross-category learning also varies across p...

The Growth of Private Label Brands: A Worldwide Phenomenon?

“…Moreover, risk perceptions are influenced by consumer exposure and familiarity with PLBs. The probability that consumers will choose and adopt PLBs increases when they perceive less risk (Erdem and Chang 2012). The role of perceived risk in the purchase of PLBs is consistent with findings from research on the adoption of innovations in that adoption of new products is also influenced by consumer risk perceptions (Rogers and Shoemaker 1971).…”

A tribute to forty years of top-level marketing research

“…Although store brands have generated tremendous interest in the literature, little work has been done on umbrella branding strategies for store brands. Erdem and Chang (2012) extend the previous work of Erdem (1998) and Erdem et al (2004) by studying the learning spillover effects of umbrella brands across categories for both national and store brands. They apply the Multivariate Multinomial Probit Model of cross-category learning across five product categories to study differences across store versus national umbrella brands in three countries (i.e., the United States, the United Kingdom, and Spain).…”

“…At the request of the JAMS Editor, Williamson also provides his added perspective on the evolving "science of organization" of which TCE is a part and, in essence, the development of TCE into a Nobel Prize-winning thought model. Erdem and Chang (2012) state that the large penetration of store brands has been accelerated by a substantial increase of their availability across various categories. Although store brands have generated tremendous interest in the literature, little work has been done on umbrella branding strategies for store brands.…”

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“…It is also useful to mention the studies of Garretson, Fisher and Burton (2002), Veloutsou, Gioulistanis and Moutinho (2004) and Erdem and Chang (2012) in which consumer preference survey results from different countries confirm that product quality is central to the consumer's decision-making process. Furthermore, Walsh and Mitchell (2010) highlight how the perception of product quality may differ based on a consumer's degree of familiarity with a type of brand as well as in relation to the role assigned to the category by the shopper.…”