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Consumers' Decision between Private Labels and National Brands in a Retailer's Store: A Mixed Multinomial Logit Application

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  • Berges-Sennou, Fabian
  • Hassan, Daniel
  • Monier-Dilhan, Sylvette
  • Raynal, Helene

Abstract

We propose to analyze the determinants of consumers' brand decision within a retailer store using a multinomial mixed logit approach. For the consumers' choice, national brands compete with private labels (both me-too product and high quality store brand). We first find that the standard private label (me-too), independently of the price effect, performs better than all national brands in terms of consumers' utility. Second, the high-quality private label does not reach its target yet in term of consumers' acceptance due to a poor product characteristics perception. Last, it appears that households' objective socioeconomic variables (income, education and household size) do not play any role in private label perception, whereas objective consumption behaviour (store loyalty) clearly favours store brand perception. We find that consumers have a lower private label demand elasticity than the low store loyal ones.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 103rd Seminar, April 23-25, 2007, Barcelona, Spain with number 9407.

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Date of creation: 2007
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Handle: RePEc:ags:eaa103:9407

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Related research

Keywords: Brands; consumers' choice; mixed logit model; willingness to pay.; Consumer/Household Economics; D12; L81; Q13;

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  1. André Bonfrer & Pradeep K. Chintagunta, 2004. "Store Brands: Who Buys Them and What Happens to Retail Prices When They Are Introduced?," Review of Industrial Organization, Springer, vol. 24(2), pages 195-218, 03.
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Cited by:
  1. Fabian Berg�s & Zohra Bouamra-Mechemache, 2012. "Is producing a private label counterproductive for a branded manufacturer?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 39(2), pages 213-239, April.
  2. Bergès, Fabian & Monier-Dilhan, Sylvette, 2012. "Mass Retailers’ Advertising Strategies Faced with Different Competitor Store Formats: Commodity Stores or Hard Discounts," TSE Working Papers 12-277, Toulouse School of Economics (TSE).
  3. Fabian Bergès & Sylvette Monier-Dilhan, 2013. "Mass Retailers' Advertising Strategies Against Commodity Stores," Economics Bulletin, AccessEcon, vol. 33(4), pages 2968-2981.

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