Effect of Store Brand Introduction on Channel Price Leadership: An Empirical Investigation

In this study, we conduct an empirical investigation of the impact of store brand introductions on the price leadership relations in a distribution channel between a retailer and national brand manufacturers. We analyze a multi-product category retail database from a major grocery chain, which captures both a period before and a period after the introduction of a store brand in each product category. By applying the time series approach to this data set, we show that store brand introductions frequently lead to price leadership changes, generally in a more favorable direction for the retailer than for the national brand manufacturer, evidenced by either the decay of the manufacturers’ price leadership or the rise of the retailer’s price leadership. However, such a change is not universal but tends to be concentrated among a certain quality tier of national brands, which is not always the low-tier, but sometimes the top-tier despite the low-price low-quality position of the store brand. The patterns detected in the data suggest that these changes are likely to reflect the retailer’s strategic effort to reshape the price leadership environment in a product category aided by the enhanced bargaining power and managerial sophistication that accompanied the store brand introductions.     

Understanding retail branding: conceptual insights and research priorities

With the growing realization that brands are one of a firm's most valuable intangible assets, branding has emerged as a top management priority in the last decade. Given its highly competitive nature, branding can be especially important in the retailing industry to influence customer perceptions and drive store choice and loyalty. We integrate lessons from branding and retail image research to provide a better understanding of how retailers create their brand images, paying special attention to the role of the manufacturer and private label brand assortment. We also highlight some important areas that deserve further research in the form of three sets of research priorities.     

Mediated-moderated effects: High and low store image,brand awareness,perceived value from mini and supermarkets retail stores

This paper addresses how different store formats moderate the relationship between store image and purchase intention, mediated by brand awareness and perceived value. Questionnaire data was collected through face-to-face interviews with retail customers on the streets of a city in southern Brazil. Hypotheses testing were performed using the partial least squares structural equation modeling, supported by Smart-PLS and the Bootstrapping procedure run in the Process software. The model's sample included 298 retail customers for each store format (supermarket and mini-market). Results showed that store image positively impacted customer purchase intentions and the mediators, perceived value and brand awareness, which had a distinct effect on the direct relation of store image and purchase intention. Store format presented moderation effects on the relation between store image and brand awareness for both store formats: the higher the perception of store image, the greater the consumer's brand awareness. However, store format did not present a moderating effect on the relationship between brand awareness and purchase intention. Store image was found to be an important independent construct that improves brand awareness and increases perceived value. The number of mini-markets in Brazil is increasing, indicating that they are supplying a need unmet by supermarkets. The study design's implementation in the city streets, respondents were requested to imagine store image, which may have affected some of the parameters. The model integrated store image as an important construct influencing purchase behavior and this study presented a mediated-moderated model with managerial implications.     

Retail Image as Seen through Consumers' Eyes: Studying International Retail Image through Consumer Photographs of Stores

Abstract

The aim of this article is to explore how retail store image is perceived by consumers from different cultural backgrounds and with different degrees of awareness and experience of the retailer. The subject is IKEA, a retailer recognized as having a global approach to the markets in which it operates, resulting in a highly standardized approach to store branding. However, rather than employing traditional methodologies to elicit consumer perceptions of store image, we attempt to capture consumer perceptions through interpretations of the visual images generated by the participants themselves. The photo-elicitation method employed captured the different interpretations and meanings attached to commonly identified elements of store image and reinforced the central role played by the store itself in retail image formation.     

Consumer and Retailer Promotions: Who is Better Off?

The long-term effects of promotions on sales are increasingly linked to the supposed shift of economic power within channels from manufacturers to retailers. However, formal knowledge about how they influence channel decisions under different promotional arrangements and the distribution of channel profits remains very sparse. In this paper, I develop two 2-period models to investigate the impact on channel decisions and profits of manufacturer-controlled and retailer-controlled promotions targeted at consumers. My findings indicate that retailers always invest in retailer promotions, while manufacturers may find it optimal to not invest in consumer promotions. Economic power shifts from manufacturers to retailers when consumer promotions significantly expand the baseline demand in the long-term. Otherwise, manufacturers remain more powerful. Trade promotions or other profit-transfer mechanisms may be indispensable in easing conflicts over who should undertake promotions, especially when these promotions substantially increase future sales.     

The relationship between store image and store brand equity: A conceptual framework and evidence from hypermarkets

Retailers are making considerable efforts to improve their brand management. The challenge they face, however, is how best to integrate coherently their stores, as brands, and their various distributor brands (store brands, private labels, etc.), in order to increase their brand equity and offer the market differential value that will stimulate customer loyalty. From this perspective, it is crucial for retailers to investigate the relationship between the store and their own brands. This study proposes two theoretical models showing the mechanism whereby store image helps increase the equity of a specific type of distributor brand (the store brand). The approach used in this analysis is based, on the one hand, on defining brand equity through its components, using the model in Aaker (1991), and on the other, on including (social and strategic) corporate dimensions in measuring store image. The empirical research made in the hypermarket sector in the Basque province of Gipuzkoa backs the majority of the proposed hypotheses. The results show that store image can be used by retailers to influence all components of store brand equity, essentially through its commercial and strategic dimension. This research is intended to address the clear lack of research on store brand equity.     

Price developments after a nominal shock: Benford's Law and psychological pricing after the euro introduction

Retail managers use psychological pricing to make the prices of goods appear to be just below a round number. The euro introduction in 2002, with its various exchange rates, distorted existing nominal price patterns while at the same time retaining real prices. We studied consumer prices before and after the introduction of the euro by using Benford's Law as a benchmark for price adjustments. Results indicate the usefulness of this benchmark for detecting irregularities in prices, and a clear trend towards psychological pricing after the nominal shock of the euro introduction. In addition, the tendency towards psychological prices results in different inflation rates in dependence of the price pattern.     

Consumer perceptions of refund depth and competitive scope in price-matching guarantees: effects on store patronage

The study investigates the effect of two characteristics of price-matching guarantees—the depth of refund offer and the scope of competitors eligible for price matching—on consumer perceptions of price-matching guarantee believability and value and consumer intentions to patronize the retailer. The results show that large refund offers built consumer patronage intentions by enhancing perceptions of the value of the price-matching guarantee, while simultaneously exerting a negative impact on patronage by reducing believability of the price-matching promise. The competitive scope also affected the patronage intentions by influencing the perceived value of the price-matching policy.     

The Eyes Have It: How a Car's Face Influences Consumer Categorization and Evaluation of Product Line Extensions

This research focuses on a previously unexamined risk associated with the widely used new product development strategy of line extensions. Specifically, it explores consumer reactions when line extensions become too visually similar and examines both short‐term and longer term strategies for solving the problem. Examined in the context of consumer durables, specifically, automobiles, the results show that consumers who make categorization mistakes when trying to distinguish between two visually similar product lines have more negative attitudes not only toward the product but also toward the parent brand. The results of Study 1 confirm that providing a design vocabulary that articulates the car's design features is effective in reducing consumer's categorization mistakes. In addition, results of Study 2 indicate that changes to the car's “eyes” (headlights) are more effective than changes to the car's “mouth” (grille) in helping consumers to differentiate among cars in the line.     

Price recall: Brand and store type differences

Price is among the most important choice criteria for customers, whose price knowledge is often surprisingly inaccurate. This study aims at providing new insights into differences in price recall across brands and store types, and their potential effect on marketing efficiency and customers’ store choice. Towards this aim, we analyze the price recall of consumers for 51 food items by a random-effects panel estimation employing a survey with 715 participants. Our results show that customers recall national brand prices better than private labels, almost irrespectively of the store type; consumers overestimate store brand prices in both store types; the effect, however, is much higher for the convenience store. These outcomes have consequences for the marketing strategy: despite a price-matching guarantee for the store brands in the convenience store, the price image is still in favor of the discounter. This result raises doubts on the effectiveness of the price-matching guarantee, at least in this context. The everyday low price strategy of the discounter seems to pay off in terms of the price image. Though both stores charge the exact same prices for their store brands, prices at the discounter are on average perceived to be significantly lower.     

Price-matching guarantees as signals of low store prices: survey and experimental evidence

Many retailers offer a price-matching guarantee that promises to pay consumers the difference if they find a lower price elsewhere. This article proposes that the effectiveness of a price-matching guarantee as a signal of low store prices depends on individuals’ beliefs about the degree to which other consumers in the market engage in price search, enforce price-matching guarantees, or both. Consistent with signaling theory, results of a survey and two experimental studies demonstrate that market level factors affect consumer beliefs about the extent to which others engage in price search and thereby the effectiveness of price-matching guarantees in lowering perceptions of store prices. The implications of the findings for retail strategy are discussed along with directions for future research.     

Probabilistic selling vs. markdown selling: Price discrimination and management of demand uncertainty in retailing

Markdown selling (i.e., price reductions over the course of the selling season) is a strategy to implement price discrimination and to manage market uncertainty that has been widely adopted by retailers. This paper explores the potential advantage of introducing an additional tool to the arsenal of retailers, probabilistic selling (i.e., offering consumers a choice to buy a product that can turn out to be any item from a predetermined set of distinct items). We show that both probabilistic and markdown selling strategies serve as price discrimination tools by offering buyers an option to purchase a “damaged” good (an uncertain product under the former and delayed consumption of a product under the latter). However, the two strategies segment markets based on different types of buyer heterogeneity: buyer preference strength under probabilistic selling and buyer patience under markdown selling. Our analytical model reveals that, compared with markdown selling, probabilistic selling can (1) improve margin management by increasing revenue from full-price sales and reducing the magnitude of discounts; and (2) improve inventory utilization by reducing stockouts and the amount of excess inventory. We identify the conditions required for probabilistic selling to be more profitable than markdown selling.     

Price Discrimination and the Cruise Line Industry: Implications for Market Definition,Competition, and Consumer Welfare

This article extends the price discrimination literature and applies it to market definition and competitive effects analysis in recent mergers in the cruise line industry. In that industry, short run output is fixed. If firms want to increase price and restrict output to price‐insensitive customers, they have to increase the output and lower price to the price‐sensitive customers. We show that with fixed output (1) it is in firms’ interest to engage in price discrimination, (2) firms have increased ability to engage profitably in price discrimination as the intensity of competition decreases, and (3) the average price of price‐sensitive and ‐insensitive consumers increase with reduced competition. Unlike the economists at the Federal Trade Commission, our analysis suggests that cruise lines engage in third‐degree price discrimination. Moreover, the cruise industry could be a separate market and a reduction in the number of competitors might raise average prices.     

Image transfer from malls to stores and its influence on shopping values and mall patronage: The role of self-congruity

Little research attention has been paid to the image transference from a shopping mall to its stores. The study reported in this article proposes an integrative model dealing with the image transference phenomenon from malls to stores and its implications in terms of creating value for shoppers and enticing mall patronage. Structural equation modeling is applied to data collected from shoppers in two urban North-Amercian shopping malls. The findings are broadly supportive of the proposed model. Mall image spills over the image of the stores located in the mall, and this occurs through a shopper's self-congruity mechanism. Furthermore, the mall's image dimensions influence hedonic shopping value through self-congruity. The stores’ image dimensions differentially influence utilitarian and hedonic shopping values assessments. Both types of shopping values are strong drivers of mall patronage. The study also discusses the implications of the findings as well as its limitations and directions for future research.     

The effect of specific discount pattern in terms of price promotions on perceived price attractiveness and purchase intention: An experimental research

This study aims to investigate consumer perceptions and reactions in terms of specific discount patterns (fixed price, 40% discount, discount from 500 TL to 300 TL and 20% + 25% discount) in price promotion. According to the results, specific discount patterns in price promotion have a significant effect on perceived price attractiveness and purchase intention. When the specific discount patterns in price promotion and gender interaction were analyzed in terms of perceived price attractiveness, the scenario of the “discount from TL 500 to TL 300” significantly differentiated from both the control scenario (fixed price) and experimental scenarios for female. For males, no significant difference was found between the control and experimental scenarios. In terms of purchase intention, a significant difference was found between the fixed price scenario and the discount scenario from 500 TL to 300 TL and between the fixed price and 20% + 25% discount scenario. The theoretical managerial implications of the study were discussed, and future research suggestions were presented.     

Hotel Service Recovery and Service Quality: Influences of Corporate Image and Generational Differences in the Relationship between Customer Satisfaction and Loyalty

ABSTRACT

As the number of tourists continues to grow globally, the hospitality industry players inevitably face more challenges. High competition among the competitors and the emergence of new technologies such as online booking platforms make the competition more intense among players in the hospitality sector. The quality of services provided is undoubtedly crucial to the success of the hotel. Hence, any service failure has to be addressed appropriately in order to maintain a high level of customer satisfaction and to keep the image of the hotel intact. It is therefore vital that service recovery programs are carefully planned to meet various types of service failures which may inevitably occur. In this study, questionnaires were distributed to customers who had experienced service failures. The aim was to investigate the influence of service quality and service recovery on satisfaction and, ultimately, the effect on customer loyalty. The research also tested the mediating effect of corporate image between the relationship of customer satisfaction and customer loyalty. The findings showed that both service recovery and service quality had a significant impact on customer satisfaction. Similarly, it was found that customer satisfaction induced customer loyalty towards the hotel operator. The result also showed that corporate image mediated partially between the relationship of customer satisfaction and customer loyalty.