Loyalty to Private Labels/National Brands and Prices Paid: Are Highly Loyal Customers Paying More?

Abstract

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.

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