Are Consumers More Loyal to National Brands Than to Private Labels?

Abstract

Abstract:The evolution of private labels has been linked to the strategy adopted by the retail industry to increase competition with national brands in terms of quality. Since the early 2000s, retailers have upgraded their store brands by introducing high-quality products along with "me too" retail products. The aim of this study is to analyze consumer perception of both types of private labels ("me-too" and high quality products) compared to national brands. We deal with three staple goods offered by three mass retail companies. We show that consumer demand for "metoo" private labels is as elastic as for national brands. This result indicates that such private labels are now considered as leading brands in terms of characteristics. However, on the high quality market, consumers are more sensitive to the price of private labels, indicating a lesser attachment to these brand names.

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“…However, considering the broader range of retailer store brands, Bergès et al. (2013) demonstrate that price sensitivity does not differ significantly between NBs and their corresponding “me too” PLs. Furthermore, in the high‐quality segment, consumers remain more sensitive to the price of PLs compared with that of NBs, implying that price is another determinant of PL buying decision.…”

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“…Consumers are more price sensitive for certain PLBs (e.g. high-end premium PLBs) than for NBs (Bergès et al, 2013). This means that consumers will easily switch brands when the price for a PLB varies versus when the price for an NB varies.…”