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Why Do Retailers Advertise Store Brands Differently Across Product Categories?

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  • Rachel Griffith
  • Michal Krol
  • Kate Smith

Abstract

We provide new evidence on retailers’ pricing and advertising of store brands in the U.K. grocery markets. We analyse a simple Hotelling model in which retailers and manufacturers endogenously advertise their respective brands; we account for the impact of advertising on retailer–manufacturer bargaining and downstream competition. The model predicts that retailers advertise their store brands less when advertising is more rivalrous. We present empirical evidence consistent with this prediction. According to our model, aggregate consumer surplus can be higher with store brands than when they are absent from the market.

Suggested Citation

  • Rachel Griffith & Michal Krol & Kate Smith, 2018. "Why Do Retailers Advertise Store Brands Differently Across Product Categories?," Journal of Industrial Economics, Wiley Blackwell, vol. 66(3), pages 519-569, September.
    • Handle: RePEc:bla:jindec:v:66:y:2018:i:3:p:519-569
    DOI: 10.1111/joie.12178
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    Cited by:

    1. Allain, Marie-Laure & Chambolle, Claire & Turolla, Stéphane, 2022. "The Effect of Input Price Discrimination on Retail Prices: Theory and Evidence from France," Working Papers 327329, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    2. Sbonelo Gitt Ndlovu & Shalen Heeralal, 2022. "An investigation into marketing activities role on the purchase of private label brands:A systematic review of trends in literature," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(1), pages 33-41, January.
    3. Martin O'Connell & Pierre Dubois & Rachel Griffith, 2022. "The Use of Scanner Data for Economics Research," Annual Review of Economics, Annual Reviews, vol. 14(1), pages 723-745, August.
    4. Hsiao, Lu & Chen, Ying-Ju & Xiong, Hui & Liu, Haoyu, 2022. "Incentives for disclosing the store brand supplier," Omega, Elsevier, vol. 109(C).
    5. Wu, Lifang & Yang, Wei & Wu, Jessica, 2021. "Private label management: A literature review," Journal of Business Research, Elsevier, vol. 125(C), pages 368-384.
    6. Bolandifar, Ehsan & Chen, Zhong & Zhu, Kaijie, 2021. "Managing competitive levers in a collaborative distribution channel," European Journal of Operational Research, Elsevier, vol. 293(3), pages 1031-1042.

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