A Positive Theory of Private Label: A Strategic Role of Private Label in a Duopoly National-Brand Market

This article offers an economic rationale for national brands to provide private labels to their retailers. We build a game-theoretic model that analyzes the interactions among two national brand manufacturers and one common retailer. In an interesting strategic role, the private label mitigates the promotion competition between the two national brands and provides benefits for all three members in the channel. Our analysis shows that offering a private label can be a credible commitment from a national brand manufacturer that it will not engage in promotions and decrease the incentive of the national brand rival to engage in promotions. In this way, we attempt to provide a reason for why national brand manufacturers provide retailers with private labels in practice. In addition, we discuss the optimal quality level of private labels.     

The Arduous Journey of Private Labels: Insights From the South African Market and Further Afield

This article presents an overview of private label brands (PLBs) by considering both the status quo and emergent trends in this sphere. The initial focus is profiling private labels in the country of South Africa, with developments from abroad then being juxtaposed against the local retail landscape. Global market trends are brought to the fore at the end of the article. PLB adoption in South Africa currently sits at a paltry 18% (little moved in the last 5 years), compared with a European average penetration rate of 30%. The reasons for this lackluster growth are varied, with a lack of retailer R&D at the root cause. Yet the conditions are right for rapid growth of this merchandise should household incomes continue to remain under pressure and should consumers fully appreciate the value proposition of such brands. Furthermore, it is expected that the global share of the market will reach 50% by 2025 (double that presently) with retailers abandoning B-brands and replacing these with their own substitute PLBs.     

The Future of Private Labels: Towards a Smart Private Label Strategy

Modern day store brands (SB) or private labels (PL), now also popularly called private brands, are brands generally owned and marketed by retailers. They have been active on the market for about 70 years. Over this time span, these brands have evolved from generic, cheap, low-quality economy or budget private labels to lower-priced-than-national brand but acceptable-quality value or standard private labels. Over time, retailers extended the value proposition to the consumer segment seeking higher quality by offering premium private labels. This strategy, called the tiered-private label, comprises offering economy PL to the price-sensitive but not quality sensitive consumers, standard PL to mainstream consumers seeking acceptable quality at lower prices, and premium PL to the quality-sensitive segment seeking value. Over the last 40 years (1980–2020), these versions of private labels have witnessed substantial growth around the world, though the growth is said to be tapering in recent times.As retailers chart the future strategy for their private labels in 2020 and beyond, a pertinent question they face is: Should they continue to offer value or even tiered PL with the same formula that brought them success in the past, or should they morph and adopt new strategies in keeping with current market trends? We support adopting a new strategy that we call the smart PL strategy. The value PL strategy and its manifestation as the tiered PL strategy cater to different consumer segments but focus primarily on price and quality as attributes of choice. In the current marketplace, consumers care not only about price and quality, but also about sustainability, ethics, social responsibility, image, so forth, perhaps more so than earlier generations. They are also more tech-savvy in using digital tools for search and purchase. Retailers, on their part, are now endowed with rich, extensive data that they can tap into to understand customers’ diverse needs, and they are able to harness technology for developing the right product and communication. Thus, the smart PL strategy is a strategy by which retailers can leverage data and technology to market private labels that meet diverse customer needs and achieve greater retail differentiation, store loyalty, margins, and profits. This thought piece provides a road map for developing such a smart PL strategy and directions for future research.     

Private Label Vendor Selection in a Supply Chain: Quality and Clientele Effects

We model a supply chain consisting of a national brand manufacturer and an independent manufacturer, both of whom are potential suppliers of store brand to a single retailer. The retailer serves two customer segments—a quality sensitive segment (high type) and a price sensitive (low type) segment. The retailer serves these two segments by targeting the national and store brands to the quality and price sensitive segments, respectively. When the national brand manufacturer supplies the store brand he internalizes the effect of store brand quality on the national brand's retail prices. This leads the national brand manufacturer to choose a lower store brand quality than the independent manufacturer. This decrease in store brand quality has the benefit of increased revenues from the high type customers along with an associated cost of decreased revenues from the low type customers. Thus, when the benefit outweighs the cost the retailer chooses the national brand manufacturer to supply the store brand. We show that the retailer will choose the national brand manufacturer to supply the store brand when (a) the size of the high type customer segment is large relative to the low type customer segment, (b) the valuations of the high type customer segment is large relative to the low type customer segment, and (c) the retailer's margin requirement on the store brand is not very high. Overall, these results suggest that retailers who serve a bigger sized quality (price) sensitive clientele would have the national brand (independent) manufacturer supply the store brand.     

A Research Model for Consumers' Intention of Buying Private Label Frozen Vegetables

This article aims at identifying the factors that affect consumers' intentions of buying private label frozen vegetables, developing a related research model, and testing this model using quantitative data from a consumers' sample in Greece.

The field research was carried out in Athens and the sample comprised 282 consumers. Data analysis was performed using Structural Equation Modeling. The results confirmed that:

• Consumers' intention of buying private-label frozen vegetables is directly affected by consumers' attitudes toward this type of products.

• Consumers' attitudes toward private-label frozen vegetables are directly affected by the perceived benefits and indirectly affected by consumer trust and perceived economic situation.

     

Private label positioning: Quality versus feature differentiation from the national brand

This paper investigates the retailer's problem of positioning her private label against two national brands in terms of both product quality and product features. Using a demand function derived from consumer utility, we show that the private label's best positioning strategy depends on the nature of the national brands’ competition and its own quality. When the national brands are differentiated, a high quality private label should position closer to a stronger national brand, and a low quality private label should position closer to a weaker national brand. When the national brands are undifferentiated, the private label should differentiate from both national brands.     

自主创新与民营企业品牌竞争力提升——中国民营企业品牌竞争力50强和品牌竞争潜力企业100家分析

本文首先提出了品牌竞争力概念、指标体系和计算方法，然后根据问卷调查结果，对制造业民营企业中品牌竞争力50强和最具品牌竞争潜力的100家企业进行了对比分析，探讨了影响企业品牌竞争力的自主创新因素，提出了进一步提升民营企业品牌竞争力的对策建议。     

Effects of pricing strategies and product quality on private label and national brand performance

Using product test ratings and panel data from more than 35,000 participating households in Germany, this study addresses the impacts of price, quality, and promotion shares on the market shares of different products, including national brands and private labels, as well as food and non-food products. The results of a path analysis reveal important differences across the four segments, as well as insights regarding the use of everyday low price and high–low retail pricing strategies. The findings also lead to key implications for manufacturers and retailers.     

Private label line proliferation and private label tier pricing: A new dimension of competition between private labels and national brands

In this study, we explore the impact of private label (PL) proliferation and pricing on consumer demand and derive profit implications for different scenarios: (i) dropping or adding a line (kids, health or muesli) within a PL tier and (ii) changing the PL tier prices. We use a representative household panel dataset (2008–2009) for the ready to eat (RTE) cereal category of two leading U.K. grocery retailers. Our results indicate line extension/delisting within the standard and premium PL tiers cannibalize each other and also steal business from NBs for the kids, healthy and muesli lines. Overall, premium PLs seem a profit generator tier that allows some room for further brand variant introductions within this tier. However, the retailer is better off, in terms of profits, if the proliferation within the economy PL tier is downgraded. Furthermore, both the retailer and NB manufacturers gain from an economy, standard and premium PL price increase, as it leads to a demand shift to NBs accompanied by a profit lift for the retailer.     

Determinants of customer brand loyalty in the retail industry: A comparison between national and private brands in South Korea

Finding motivations for customer brand loyalty is one of the most popular academic and practical research fields; in this regard, some scholars have explored motivations in the retail industry. As the concept of private brands has been one of the most widely employed strategies for business success in the industry, comparing private and national brands in terms of customer loyalty is an important topic in the retail industry. Thus, the current research focuses on exploring antecedents of customer loyalty in private and national brands, as well as investigating whether there are notable structural differences between the brands. The results, based on 1,631 responses, indicate that customer perceived service/product quality, satisfaction, trust, and cost are notable determinants of brand loyalty, while the relationship between customer satisfaction and service quality of private brands is not supported. Moreover, both indirect and direct effects of the employed factors on customer brand loyalty are reported.     

Offering value and capturing surplus: A strategy for private label sales in a new customer loyalty building scenario

The competition between private label brand and national brands in the diaper category is investigated from the view of the private label brand manager. In this category, new customers routinely enter the category buying entry-level diaper sizes (for infants) and then progress to buy larger diaper sizes over time (as their child grows older). Thus, consumer comparisons between the private label brand and national brands are focused on single diaper sizes during any single purchase scenario. Because private label brands are known to suffer from low quality perceptions that often understate the true quality levels of private label brands, this paper advances a pricing strategy to optimize private label performance in the category. The private label brand should price significantly low for small diaper sizes (maintaining a sizeable price gap from national brand competitors). Then, in most cases, the private label brand should shrink the size of this price gap for large diaper size offerings. This strategy will successfully offer initial value to new customers, build private label brand quality perceptions and loyalty, and then capitalize on these gains through higher dollar sales in the late stages of the customer relationship. The price gap shrinking strategy is found to be generally effective, but high national brand competition and too high of an initial price gap diminish the effectiveness of the strategy.     

Private label usage and store loyalty: The moderating impact of shopping value

This study endeavours to develop and analyze a conceptual model that sheds light on the moderating impact of utilitarian and hedonic shopping values in determining the relationship between private label usage and store loyalty. In a test with data collected from 267 consumers, conceptual framework was analyzed by using structural equation modeling. The findings reveal that a negative relationship was observed between private label usage and store loyalty. However, utilitarian shopping value converts this existing negative relationship between private label usage and store loyalty into a strong positive association. This study offers such interesting implications for managers that developing marketing strategies oriented to create utilitarian shopping value during the shopping experience may enable retailers to enhance their store loyalty in a positive way in the long run. Prior research has not approached the private label product phenomenon from a shopping value perspective. Hence, this study attempts to measure the moderating impact of shopping value on the linkage between private label usage and store loyalty for the first time.     

Examination of Factors Moderating the Success of Private Label Brands: A Study of the Packaged Food Market in China

No abstract available for this article.     

The Role of Private Label Brands in Enhancing Service Satisfaction in the Hotel Industry: Comparing Luxury and Boutique Hotels

ABSTRACT

This research proposes private label branding as a strategy that can have a positive effect on guest satisfaction and loyalty in hotels that cater to travelers seeking a special hotel experience. We test this using a sample of guests in two hotels: a five-star luxury hotel (N = 225) and a boutique hotel (N = 101). Findings show that in the luxury hotel but not the boutique hotel, perception of a private label had a direct impact on loyalty, and an indirect impact on loyalty through its effect on guest satisfaction. The theoretical implications and recommendations for hoteliers based on the findings are discussed.     

The development of a consumer value proposition of private label brands and the application thereof in a South African retail context

Private Label Brands are of strategic importance to retailers worldwide. However, there is a dearth of knowledge, particularly in emerging markets, as to the manner in which consumers cognitively assess these brands. At the heart of the issue is a gap in knowledge as to how consumers formulate a value proposition in their minds and the effect of loyalty to existing brands. This paper assumes a positivist, hypothetico-deductive approach by attempting to address the question: What are the key drivers of perceived value of private label branded breakfast cereals, taking price, perceived risk and perceived quality into account? Moreover, the study considers how various attributes of brand image contribute to the perception of brands and the extent to which loyalty to established national brands inhibits purchasing intent of private label merchandise. A conceptual model was developed, and tested by means of Partial Least Squares path analysis, using a sample of 482 respondents. The outcome reflects that consumers take cognisance of value through price, risk and quality cues, but that loyalty to existing brands has a minimal effect in the final stage of the model. Moreover, both in- and out-of-store influences were found to play a significant role in the determination of product quality. Retailers therefore possess a number of levers at their disposal to influence perceived value, most notably price, product quality and the perceived risk portfolio, as well as packaging, shelf placement, store environmental factors, etcetera.     

Private label brands: major perspective of two customer-based brand equity models

In recent years the retail industry has been characterized by the fast growth of private labels, with an increase of the offer of private labels and the enhancement of their value in the marketplace. This research focuses in private label brand equity to deepen the understanding of its origins, by analyzing two alternative customer-based conceptual models. The present study was developed in the large retailing industry, comprising different retailing formats that offer private labels to consumers. Our findings suggest a conceptual private label brand equity model, which is slightly different from the Aaker's brand equity model, considering store image as an antecedent and stressing its importance in building and enhancing private labels' brand equity. Additionally, retailers searching for successful ways to compete in the retail market need to examine in more detail the customer-based brand equity related to their private labels.     

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

Consumers increasingly consider private labels to be as good as national brands. This research raises the question of whether national brands and private labels equally affect consumers’ sensory perceptions and purchase intentions. The results of two studies show that consumers reverse their evaluation of private labels (vs. national brands) when tasting the product in an informed (vs. blind) condition. When consumers are not aware of brand names, they indicate better taste and higher purchase intentions for private labels. However, the opposite is true when they try products in an informed condition. We discuss the implications for private labels and national brands.     

Trust transfer from manufacturer to private label brand: The moderating role of grocery store format

Guided by the theory of trust transfer, the present study sheds new insights on the role of trust in manufacturer brand on trust in private label brand (PLB), perceived risk and willingness to buy (WTB). The moderating role of grocery store format between trust in manufacturer brand, trust in PLB and WTB is also examined. The empirical data were collected by means of a written survey instrument from consumers. The hypotheses were analyzed with maximum-likelihood estimation. The results revealed the positive influence of perceived manufacturer brand quality on trust in manufacturer brand and trust in PLB. The positive linkage between trust in manufacturer brand and trust in PLB is also supported. The negative influence of trust in manufacturer brand and trust in PLB on perceived risk was revealed and the positive impact of trust in manufacturer brand and trust in PLB on WTB was also confirmed. The findings provide support for the negative link between perceived risk and WTB. Additionally, perceived risk partially mediates the relationships between trust in manufacturer brand, trust in PLB and WTB. Furthermore, store format moderates the impact of trust in manufacturer brand and trust in PLB on WTB. Theoretical and managerial implications are presented based of the research findings.     

Introduction. The Internationalisation of the Innovation Process

The international economics of business and management has focused - both in the academic literature and in corporate and public policy discussions - increasingly on issues of globalisation, innovation and 'competitiveness'. These issues, and in particular their interrelation, are analysed in detail in this Special Issue of the International Journal of the Economics of Business. This opening article aims to set the scene by considering how the rather distinct literatures around the above three topics can best be drawn upon in order to focus on what implications the new global economic environment has for the economics of business and public policy.     

The battle of traditional retailers versus discounters: The role of PL tiers

For grocery retailers in Europe, intense competition from hard discount formats like Lidl and Aldi is an established part of the competitive landscape. Due to the highly competitive retail environment, traditional retailers’ private label (PL) tiers are now set to become the new battle ground in this competition. This study analyzes how PL tiers (i.e. economy, standard and premium) affect the competition between discounters and traditional retailers. We use a representative UK household panel dataset (2009–2010) for the ready-to-eat cereal and canned soup category, and estimate a demand model for the choice between national brands (NBs) and PL tiers across the top-7 UK retailers. Using our demand estimates, we conduct several counterfactual experiments that predict consumer responses to different strategies of traditional retailers and discounters in their fight for the consumer. In particular, we compare the effectiveness of three types of PLs offered by traditional retailers to fight discounters: economy PLs versus standard PLs versus premium PLs. We find that premium PLs are not very effective strategies for traditional retailers to fight with discounters. On the other hand, economy PLs manage to steal some market share from discounters, but as a downside they also cannibalize traditional retailers’ standard PLs. Standard PLs seem the most effective tool to fight with discounters, since they steal most market share from discounters (and NBs). From the point of view of the discounters, our results indicate that discounters benefit from a further increase in their NB offerings (assortment depth) as well as from a price cut in their own PLs.