Price-quality relationship in pricing strategies for private labels

Abstract

Purpose – This article aims to close some research gaps by differentiating between brand types and price tiers. Many consumers perceive high prices as signals of high quality, yet researchers tend to find only low average correlations between price and objective quality. Previous studies do not account for market shares and paid prices though. Design/methodology/approach – A German consumer panel with more than 30,000 households reveals market shares and paid prices. Combining these data with product test ratings, the authors evaluate price-quality relationships with Spearman’s rank correlation coefficients and distinguish food from non-food products, national brands and private labels and three price tiers. Findings – High price-quality correlations for national brands and non-food private labels indicate that a higher price signals greater product quality. For food private labels, negative correlation coefficients inhibit the use of price as a quality indicator. The price-quality relationship for food private labels implies strong competition among brand owners, based on the price and quality of their products. Originality/value – This article investigates price-quality correlations by accounting for paid prices and product market shares; it also reveals differences across food and non-food products, national brands and private labels and different price tiers against the background of competition strategies. By addressing when consumers use price as a quality indicator, it outlines important managerial implications for manufacturers, retailers and consumers.

Private labels versus national brands: The effects of branding on sensory perceptions and purchase intentions

“…First, although price has often been associated with positive product perception (Doods et al, 1991), our research may be limited by the fact that we did not control for price. However, for private labels of food products, negative or small correlation coefficients between price and quality have been shown to prevent price from indicating quality (Olbrich and Jansen, 2014), which may attenuate the limitation. Second, we conducted our experiments in controlled environments.…”

Antecedentes Da Intenção De Compra De Marcas Próprias: Um Estudo No Mercado Emergente

“…Entretanto, Dawes e Nenycz-Thiel (2013) destacam que, para isso, deverão investir na qualidade desses produtos, que é importante para a atratividade da loja e para evitar contaminação negativa da imagem do varejista devido à má imagem da marca própria (Olbrich & Jansen, 2014). As marcas próprias estão se consolidando no setor de alimentos, por ofertarem qualidade similar às marcas nacionais, a preços competitivos (Rubio, Oubiña, & Villaseñor, 2014).…”

“…Pereira (2001) ressalta que, de maneira geral, as marcas próprias são comercializadas com preços mais baixos em relação às marcas nacionais, o que pode comprometer a imagem da marca própria. Isso ocorre porque o risco percebido tende a ser mais baixo quando os preços são mais altos, uma vez que os consumidores assumem uma relação linear entre preço e qualidade (Olbrich & Jansen, 2014). Assim, a inferioridade percebida nas marcas próprias é uma fonte de incerteza acerca do nível de satisfação para os consumidores desse tipo de marca, aumentando o risco associado à sua compra (Mieres, Martín, & Gutiérrez, 2006).…”

An Investigation into Consumer Search and Evaluation Behaviour: Effect of Brand Name and Price Perceptions

“…Until recently, the focus of consumer researches has shifted from the matured markets of the United States to maturing markets of Japan, China, Austria and the Netherlands (Olbrich & Jansen, 2014). It remains to be seen if the existing relationships would hold for consumers hailing from emerging nations since according to Anderson, De Palma and Thisse (1992) the idiosyncratic nature of consumers' decisionmaking delimit the applicability of existing researches.…”