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National brands versus private labels: An empirical study of competition, advertising and collusion

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  • Parker, Philip
  • Kim, Namwoon

Abstract

This article considers competition between nationally advertised brands and quality-equivalent privatelabel brands (a form of store, house or own-label branding). Philip Parker and Namwoon Kim investigate the impact of advertising on market power across brands. Supporting recent theoretical arguments (though contradicting others), the industry study reveals that heavy advertising among national brands can increase prices, revenues, and profits for both national brands and private-label brands. Using a representative category, the authors report nine tests to support the conclusion that the 'battle of private labels' may result in 'an alliance with private labels'. From a theoretical perspective, the study rejects the advertising as information hypothesis and the authors find that advertising sustains (significantly increases) market power and/or facilitates collusive strategies.

Suggested Citation

  • Parker, Philip & Kim, Namwoon, 1997. "National brands versus private labels: An empirical study of competition, advertising and collusion," European Management Journal, Elsevier, vol. 15(3), pages 220-235, June.
    • Handle: RePEc:eee:eurman:v:15:y:1997:i:3:p:220-235
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    Cited by:

    1. Cho, Young Sang & Rha, Hye-Su & Burt, Steve, 2015. "The impact of customer awareness of manufacturer name disclosure on retail brand attitudes and loyalty in Korea," Journal of Retailing and Consumer Services, Elsevier, vol. 22(C), pages 128-137.
    2. C. Akbay & E. Jones, 2006. "Demand elasticities and price-cost margin ratios for grocery products in different socioeconomic groups," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 52(5), pages 225-235.
    3. Sodano, Valeria & Hingley, Martin, 2007. "Channel Management and differentiation strategies: A case study from the market for fresh produce," 105th Seminar, March 8-10, 2007, Bologna, Italy 7869, European Association of Agricultural Economists.
    4. G. R. Chen, 2014. "How do advertised brands benefit from private labels? An application of rational expectations models," Applied Economics, Taylor & Francis Journals, vol. 46(24), pages 2891-2902, August.
    5. Nierobisch, Tim & Toporowski, Waldemar & Dannewald, Till & Jahn, Steffen, 2017. "Flagship stores for FMCG national brands: Do they improve brand cognitions and create favorable consumer reactions?," Journal of Retailing and Consumer Services, Elsevier, vol. 34(C), pages 117-137.
    6. Anselmsson, Johan & Johansson, Ulf & Marañon, Antonio & Persson, Niklas, 2008. "The penetration of retailer brands and the impact on consumer prices—A study based on household expenditures for 35 grocery categories," Journal of Retailing and Consumer Services, Elsevier, vol. 15(1), pages 42-51.
    7. Domenico Morrone & Rosamartina Schena, 2021. "The Evolution of Private Labels in Food Proposals: The Case of the Top Four Italian Retailers and the Purchase Propensity of Consumers," International Journal of Business and Management, Canadian Center of Science and Education, vol. 14(3), pages 1-69, July.
    8. Amrouche, Nawel & Zaccour, Georges, 2007. "Shelf-space allocation of national and private brands," European Journal of Operational Research, Elsevier, vol. 180(2), pages 648-663, July.
    9. M Esteban-Bravo & N Lado, 2011. "Brand value in horizontal alliances: the case of twin-cars," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(8), pages 1533-1542, August.
    10. Pritha Ghosh & Subrata Saha & Shamindra Nath Sanyal & Swati Mukherjee, 2021. "Positioning of private label brands of men’s apparel against national brands," Journal of Marketing Analytics, Palgrave Macmillan, vol. 9(3), pages 210-227, September.
    11. Dawes, John & Nenycz-Thiel, Magda, 2013. "Analyzing the intensity of private label competition across retailers," Journal of Business Research, Elsevier, vol. 66(1), pages 60-66.
    12. Li, Xun & Wang, Rui & Lopez, Rigoberto A., 2016. "Energy Shock and Price Adjustment: National Brands vs. Private Labels of Retail Milk Products," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235613, Agricultural and Applied Economics Association.
    13. Bonanno Alessandro & Lopez Rigoberto A., 2005. "Private Label Expansion and Supermarket Milk Prices," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-18, February.

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