Understanding the Characteristics of Price Elasticities for Frequently Purchased Packaged Goods

This study examines category and brand level factors of packaged goods to determine which ones are related to brand price elasticities. A new nonparametric method of elasticity calculation is presented that is suited to situations where detailed feature and display information is not available. To obtain results that lead to strong and reliable generalisations, we examine 26 categories and 110 brands using store level weekly scanner data. We also synthesise our results with four previous studies that have looked at determinants of price elasticities. Three factors consistently emerge as important drivers of elasticity. They are, competitive intensity in the category, whether or not the product is storable and the brand market share. A further, less certain, factor is the frequency of promotion activity, with categories and brands having more frequent promotions exhibiting lower sales increases when one or more of the brands price promotes.     

Promotional Strategies of Brand Leaders,Challengers, and Followers

Sales promotion tools are assuming increasingly im- portant roles in brand marketing strategies. A conceptual promotion model is proposed to capture the similarities and differences in the price and display based promotional practices and their effects on market shares for brand leaders. challengers and followers. Using a two stage econometric analysis, we observe a clear gradation in the effects of promotions on the market shares of these three categories of brands, respectively. The way in which price-promotion and dis- play decisions are coordinated is also found to be different for these three brand categories.     

Brand-Pack Size Cannibalization Arising from Temporary Price Promotions

This study investigates how price promotions for one pack-size of a brand steal sales from the other pack-sizes of the same brand. To do so, the study examines twelve grocery product categories (seven US, three UK, two Australian). The analysis finds heavy cross-pack cannibalization. On average, 22 percent of the sales uplift for a promoted brand-pack size comes from other pack sizes of the same brand. Cross-pack cannibalization most typically occurs in the week of the promotion, but also transfers future week's sales away from the non-promoted pack size in 31 percent of cases. The study finds higher cannibalization is associated with packs that sell for a higher dollar value than others sold under the same brand; whereas higher price-per-weight, a packaging difference, and the item having a larger relative share of sales in the brand portfolio, are linked to lower cannibalization. Also examined is the impact of pack-size cannibalization on promotion profitability for retailer PLs. That analysis finds PL price promotions have generally negative impacts on PL profits, and that pack-size cannibalization exacerbates this negative outcome. The results suggest both retailers and manufacturers should carefully consider pack-size cannibalization when evaluating the outcome of temporary price promotions. The study also provides some evidence-based recommendations from which managers can attempt to minimize such cannibalization.     

Gibrat's law in marketing: The case of liquor brand sales

We test the applicability of Gibrat's Law in the liquor brand market. Basically, we model annual changes in the unit sales of the top fifty liquor brands as white noise. Our results reject this model, but we do find that changes in sales are independent of starting market sales. This leads to the interpretation that brands with above average market share do not tend to gain market share, i.e., initial market share does not affect the subsequent change in market share. Furthermore, brands with above average sales do not have more stable sales than do firms with below average sales. Changes in sales appear highly positively correlated between periods, i.e., brands that gain sales in one period tend to gain sales in the next. Finally, no major liquor type or manufacturer had consistently and significantly greater or lower success across our various annual time periods.     

Bridge,Focus, Attack,or Stimulate: Retail Category Management Strategies with a Store Brand

We investigate a monopolist retailer's category management strategy where the main strategic decisions are how to horizontally position a store brand relative to the incumbent national brands and how to price the store and national brands for retail category profit maximization. We analyze a market composed of two consumer segments with differing tastes and heterogeneity with respect to willingness to pay and a product category consisting of two competing national brands and one store brand. We find that contrary to the existing literature, it is not always optimal for a retailer to position its store brand against the leading national brand; instead there are many situations where it is best to position the store brand close to the weaker national brand or to position it in the “middle” so it appeals to both national brands' target segments. In the process we identify four distinct category management strategies that a retailer can use with a store brand. In three of these the optimal store brand price is the brand's monopoly price, while in the remaining one strategy the price is lower. We also suggest an easy to implement means for a retailer to determine which strategy is best to use, depending on the particular competitive environment present before the introduction of the store brand and the relative quality of the store brand. We find that the store brand entry is most beneficial to the retailer when the national brands are moderately differentiated. Finally we show that introducing a store brand not only allows the retailer to garner a higher share of the channel profits through higher retail margins, but also often provides the retailer the benefit of increases in national brand unit sales as well as incremental sales from the store brand. JEL Classification: M310     

Store brand and national brand promotion attitudes antecedents

Retailers compete against national manufacturers by launching store brands. National manufactures regularly use brand promotions to fight store brands back. The purpose of this article is to find out whether attitudes toward national brand promotions and store brands have similar or different conceptual antecedents. The study presents and tests a model of the effects of shoppers´ characteristics (price and non-price-related) on attitudes toward store brand and national brand promotions. The results support that constructs relating to price impact both store brand attitude and national brand promotion attitude, but the strength of some of these relationships differ. Other shopper characteristics like brand loyalty and store loyalty, have similar negative and positive effects, respectively. These slight differences suggest that promotions of national brands might be a good tool for fighting back store brands, but manufacturers need to design and target these promotions carefully in order to avoid head-to-head competition.     

Price–Quality and Market Share of Consumer Goods in Spain: Retail Brands and Manufacturer Brands1

The development of retail brands has been favoured by the creation of large chains and by the high level of business concentration in the retail sector. It has been supported by an increasing number of consumers who are aware of value and consider that retail brand is the best alternative, with quality levels similar to those of leading manufacturer brands but with lower prices. In this survey, we analyse the price differentials between manufacturer brands and retail brands in several categories of widely consumed products. We study the relationship between the price differential and the mean category price with the market share of retail brands, for foodstuff, perfumes and cleaning materials categories. Finally, we determine the possible connection between the price of a consumer good brand and its real quality.     

A meta-analysis of national brand and store brand cross-promotional price elasticities

This paper investigates whether price discounts by national brands influence private-label sales and vice versa through meta-analysis of 261 cross-price elasticity estimates from sixteen product-chains. On average, price reductions by national brands and private labels have more or less equal influence on each others' sales. However, there is greater variation in the effect of private-label price cuts across national brands. National brands with large market shares decrease private-label sales through price cuts but are seldom affected by private-label discounts. National brands with lower relative price have greater influence on private-label sales and are also affected more by private-label price cuts.     

Market Shares of Stores:

The effect of marketing strategy variables on the market shares of shore is examined. Both manufacturers and retailers play equally important roles in the functioning of marketing channels. In spite of this, the impact of marketing strategy variables on the competitive performance of stores, rather than that of brands, has been far less commonly examined in the literature. A market share model is developed and then tested using state-of-the-art scanner data. The results show statistically significant differences in the effects, on store share, of price and promotional variables between leader and follower brands. In addition, the market share models are able to predict store market shares with a high degree of accuracy in a hold-out sample. The model is then expanded to include variables with respect to competitor brands and competitor stores and then tested. Various managerial implications of the differential effects of brand strategy are discussed.     

Which Products are More Responsive to In-Store Displays: Utilitarian or Hedonic?

In-store displays aim to boost sales of both utilitarian and hedonic products. Noting typical differences in the information processing and purchase behavior evoked by these product types, and building on congruency theory principles, the authors propose that different types of in-store displays (i.e., island, end-of-aisle, or shelf signage) are more appropriate for utilitarian versus hedonic products, and the use of price or product promotions might reinforce these effects. With a database that combines three data sources (scanner, observational, and survey), this article presents an analysis of a market share model at the SKU level. The results confirm that in-store displays have differential effects on sales, depending on their characteristics; congruency between the decision-making process of utilitarian versus hedonic products and the characteristics of in-store display types moderates their effectiveness in terms of SKU sales. Shelf signage strongly increases the sales of utilitarian products, whereas island and end-of-aisle displays increase sales of hedonic product categories more effectively. The use of congruent promotions creates synergistic influences that reinforce these effects. In particular, price promotions improve the impact of shelf signage on utilitarian products, and product promotions strengthen the impacts of island and end-of-aisle displays on hedonic products. These results extend prior research on in-store marketing actions and the nature of utilitarian versus hedonic products, as well as providing recommendations for retailers and manufacturers seeking to optimize their retail space and commercial budgets.     

How do price range shoppers differ from reference price point shoppers?

Existing research demonstrates that reference price models can explain a significant amount of the variation in customers' price perceptions and purchase behaviors. This study extends the reference price literature by introducing the price range model, which proposes that price judgments are based on a comparison of the market price to the entire range of currently available prices. Our results demonstrate that the fit of a structural heterogeneity finite mixture model improves when the price range model is included along with internal and external reference price models and that the price range model explains a substantial proportion of customers' purchase histories in the toilet tissue category. Profile analysis indicates that internal reference price shoppers switch brands much less frequently than the other two segments and respond to feature promotions for their preferred brand(s). External reference price shoppers have an intermediate level of brand preference and respond significantly less than the other two segments to feature and display promotions. Price range shoppers have the lowest brand loyalty and respond most strongly to both feature and display promotions.     

Integrative effects of firms' price and endorsement strategies on consumers' loyalty intention

This research examines the effects of price and brand endorsement that are adopted by firms from a consumer-based viewpoint, and provides practical brand management discussions as a reference for both manufacturer brands and retail store brands. According to the findings, manufacturer brands support high prices and boost those vivid impressions which are helpful in engendering consumer loyalty intention. Without a careful evaluation process, a brand-endorsing strategy may prove detrimental to the manufacturer. Retail store brands follow distinct pricing policies and carry out brand-endorsed strategies. Price/endorsement stimuli influence consumer brand loyalty through the partial mediating effect of brand impression. Manufacturers and retailers could define appropriate price premiums on products with a potential for a manufacturer–retailer brand co-branding as identified by market research, thus increasing the sales of both.     

浅议品牌发展及品牌战略

“适者生存”的哲学适合于现代市场经济每一个企业,商场如战场。据有关资料表明．产品的市场份额正向名优产品集中,名牌企业控制了同类产品20％的市场份额。未来将会是名牌竞争的时代．名牌坐天下的局面为时势所趋。     

A Micromodel of New Product Adoption with Heterogeneous and Forward-Looking Consumers: Application to the Digital Camera Category

We develop an empirical model for the adoption process of a new durable product that accounts for consumer heterogeneity as well as consumers forward-looking behavior. Accounting for heterogeneity is important for two reasons. As the mix of consumers with different preferences and price sensitivities could change over time, firms need to update their marketing strategies. Further, it allows for a variety of shapes for the aggregate adoption process over time. As prices for durable and technology products fall over time with firms continually introducing enhanced products, consumers may anticipate these prices and improvements and delay their purchases in the product category. Forward-looking consumers optimize purchase timing by trading off their utilities from buying the product and their expectations on future prices, quality levels, and brand availability. Such forward-looking behavior will result in price dynamics in the marketplace as price changes today influence future purchases. And it results in different shapes of the new product sales pattern over time by influencing the time to take-off. We show how the parameters of our model can be estimated using aggregate data on the sales, prices, and attributes of brands in a product category. We apply our model to market data from the digital camera category. Our data are consistent with the presence of both heterogeneity and forward looking behavior among consumers. At the product category level, we are able to decompose the effects of the entry of Sony into primary demand expansion and switching from other brands. At the brand level, we find that there exist several segments in the market with different preferences for the brands and different price sensitivities leading to differences in adoption timing and brand choice across segments. For a given brand, we show how the changing customer mix over time has implications for that brands pricing strategies. We characterize how price effects vary across brands and over time and how price changes in a given time period influence sales in subsequent periods. Model comparison and validation results are also provided.     

A Multiple-discrete/Continuous Model of Price Promotion

Understanding the effect of temporary price reductions, or price promotions, on sales of consumer packaged goods is an area of ongoing interest, both in academia and in practice. Price promotions, however, are becoming an increasingly important method of managing consumer demand for fresh produce items. Modeling the impact of price promotions must take into account the differentiated nature of fresh produce and the fact that consumers tend to purchase multiple items of only a few of the products available to them. Neither a continuous nor a discrete model of demand is appropriate. In this paper, we apply a multiple-discrete/continuous model of fresh produce demand to study the impact of price promotion on retail apple sales. Our findings show that the brand switching/category incidence effect of promotion is closer to 65/35 than the more usual 80/20 rule (80 percent of the effect is brand switching and 20 percent purchase incidence) when the nature of the decision is appropriately taken into consideration.     

Consumer attitudes and loyalty towards private brands

Private or store brands improve the efficiency of consumer decision making by offering equivalent quality products at lower prices. The present study evaluated consumer attitudes towards private brands with the goal of understanding their appeal in order to enhance efforts to convince more consumers to buy them. We used three samples (ns = 279, 245 and 305) of US consumers to compare attitudes of buyers of private and national brands in three product categories: orange juice, cereal and bottled water. The results show that private label buyers (23% of orange juice, 6.5% of cereal and 14% of bottled water buyers) consider brands themselves to be less important and private brands to offer better performance than do national brand buyers. When asked about specific brands, national brand buyers tended to be price insensitive towards national brands, and private label buyers price insensitive towards store brands. In addition, the national brand buyers saw some of the national brands to be more relevant to their lifestyles and needs, but the private label buyers saw the private labels the same way. Being relevant to consumers' lives appears to influence brand selection. Besides touting lower prices, private brand promotions might stress the equivalent performance of private labels and create promotions showing how these brands can be relevant to consumers' lifestyles and needs.     

The Effectiveness of Sales Promotion Tools among Indian Consumers: An Empirical Study

Marketers use sales promotions to boost sales. Sales promotion tools vary in their effectiveness to elicit different sales responses. Companies have a specific goal when they choose to use any promotional tool. Many researchers believe that sales promotions are zero sum game. Unlike in the West, in India brand loyalists outnumber price buyers by 200%. This paper investigates the effectiveness of select sales promotional tools in generating different buying behaviors. The study reveals that sales promotions, in India, do not help in category expansion. They are effective measures for inducing brand switching, stock piling, and purchase acceleration.     

Determinants of Store Brand Share

Private labels or store brands have witnessed considerable growth in the last few decades, especially in grocery products. However, market shares of store brand vary considerably across categories, markets, and countries. A natural question of interest to academics and practitioners is what factors influence store brand market shares. Drawing on a utility framework, we develop 21 consumer, manufacturer, retailer, and product-market characteristics that can influence store brand share. We test the empirical generalizability of the effect of these determinants through a meta-analysis of data from 54 individual and aggregate market studies. Twenty of the 21 determinants show significant, empirically generalizable effects. We discuss the key findings, their implications, and directions for future empirical research.     

Price Awareness and Consumers’ Use of Deals in Brand Choice

There is evidence that consumer knowledge of prices is limited, implying that, on occasions, consumers may not be fully informed of prices when making a brand purchase. On such occasions, how do consumers make their brand choice decision? One possibility is that consumers use their expectation of prices. This raises an interesting question. To what extent is brand purchase either a function of preferences and posted prices or, of preferences and expectation of brand prices? Another important issue relates to the role of displays and features in simplifying consumer brand choice. First, do promotions cause consumers to restrict their attention to only promoted brands? Second, do promotions affect the price aware consumers more than the price unaware consumers? Our study uses scanner data on ketchup and peanut butter categories to answer the foregoing questions. We find that between 40 and 50% of the purchases are made by consumers using expectations of prices rather than posted prices. Consumers using price expectations may be thought of as being “unaware” of prices. We also find that promotions cause some consumers to focus exclusively on promoted brands, and this effect is greater on the price aware consumers than on the price unaware consumers. Our findings have an important bearing on the rationality of consumer expectation of prices, especially of the promoted brands. Price aware consumers act as a check against firms promoting without accompanying price cuts.     

Market mechanics: A study to measure the effect of marketing instruments on the market position of fast-moving consumer goods

The objective of the research was to establish the various effects of the marketing instruments on the market shares of fast-moving consumer goods. The marketing instruments analyzed were price level, price changes, promotion, advertising, and media mix. Within the analysis the integrated effect of the distribution pattern had to be taken into account. The analysis of 186 brands and the data gathered over 7 three-month periods was taken from two models loosely based on Koyck. The results can be used to estimate the effectiveness of the marketing tools under scrutiny and their declining marginal revenue in the German market. A number of different efficiency ratings can be detected between the separate product categories under analysis. For marketing managers there are three particularly interesting points: (1) Brands with a low price index have only relatively small market advantages in comparison with expensive brands; (2) but price changes lead to very strong movements in the market shares; (3) in the case of brands with a small share of the advertising spent, both print and TV advertising have a similar effectiveness. With a larger share of advertising, the TV effectiveness declines because of saturation effects.