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Confirming the price effects of private labels development

Author

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  • Bontemps, C.
  • Orozco, V.
  • Réquillart, V.

Abstract

We study the price response of national brands to the development of private labels. We use monthly data from a consumer survey reporting their purchases for 218 food products. We show that when private labels have a significant effect on national brands prices (144 cases over 218), that is positive (89%). We also show that the increase in the prices of national brand products is explained by a strategy of product differentiation. Finally, price reaction of national brands differs with the type of private labels they are facing. This paper confirms, on a larger number of products, previous empirical results. ...French Abstract : Les auteurs étudient la réponse en prix des producteurs de marques nationales au développement des marques de distributeurs. Ils utilisent des données mensuelles d'achats issues d'un panel de consommateurs, concernant 218 produits alimentaires. Ils montrent que le développement des marques de distributeurs a un effet significatif sur les prix des marques nationales (144 cas sur 218), qui est positif (89%). Ils montrent aussi que l'augmentation des prix des marques nationales est, en partie, expliquée par une stratégie de différenciation des producteurs de marques nationales. Enfin, la réaction en prix des marques nationales est différente suivant le type des marques de distributeurs. Ce papier confirme, sur un plus grand nombre de produits, nos précédents résultats empiriques.

Suggested Citation

  • Bontemps, C. & Orozco, V. & Réquillart, V., 2005. "Confirming the price effects of private labels development," Economics Working Paper Archive (Toulouse) 200506, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).
  • Handle: RePEc:rea:inrawp:200506
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    File URL: http://www.toulouse.inra.fr/centre/esr/wpRePEc/bon200506.pdf
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    References listed on IDEAS

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    1. Bergès-Sennou Fabian & Bontems Philippe & Réquillart Vincent, 2004. "Economics of Private Labels: A Survey of Literature," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 2(1), pages 1-25, February.
    2. Bontemps Christophe & Orozco Valerie & Réquillart Vincent & Trevisiol Audrey, 2005. "Price Effects of Private Label Development," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-18, February.
    3. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-528, Fall.
    4. Michael B. Ward & Jay P. Shimshack & Jeffrey M. Perloff & J. Michael Harris, 2002. "Effects of the Private-Label Invasion in Food Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 961-973.
    5. 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;The Industrial Organization Society, vol. 24(2), pages 195-218, March.
    6. Pradeep K. Chintagunta & André Bonfrer & Inseong Song, 2002. "Investigating the Effects of Store-Brand Introduction on Retailer Demand and Pricing Behavior," Management Science, INFORMS, vol. 48(10), pages 1242-1267, October.
    7. Bontems, Philippe & Monier-Dilhan, Sylvette & Requillart, Vincent, 1999. "Strategic Effects of Private Labels," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(2), pages 147-165, June.
    8. Gabrielsen, Tommy Staahl & Sorgard, Lars, 2007. "Private labels, price rivalry, and public policy," European Economic Review, Elsevier, vol. 51(2), pages 403-424, February.
    9. Mills, David E, 1999. "Private Labels and Manufacturer Counterstrategies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(2), pages 125-145, June.
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    Citations

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    Cited by:

    1. Fabian Bergès & Philippe Bontems & Vincent Réquillart, 2009. "L'impact économique du développement des marques de distributeurs," Economie & Prévision, La Documentation Française, vol. 0(3), pages 41-56.
    2. Zhuang, Yan & Dimitri, Carolyn & Jaenicke, Edward C., 2010. "Price Reactions And Organic Price Premiums For Private Label And Branded Milk," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116388, European Association of Agricultural Economists;Agricultural and Applied Economics Association.
    3. Castellari, Elena & Moro, Daniele Daniele & Platoni, Silvia & Sckokai, Paolo, 2014. "Investigating the impact of Private Labels on National Brand prices in the Italian yogurt market," 2014 Third Congress, June 25-27, 2014, Alghero, Italy 173020, Italian Association of Agricultural and Applied Economics (AIEAA).
    4. Sckokai, Paolo & Soregaroli, Claudio, 2006. "Do consumers benefit from private label development?," 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece 10068, European Association of Agricultural Economists.
    5. repec:eee:jfpoli:v:74:y:2018:i:c:p:212-224 is not listed on IDEAS
    6. Tiboldo, Giulia & Lopez, Rigoberto & Hirsch, Stefan, 2016. "Private label market power: evidence from Italian dairy retailing," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235592, Agricultural and Applied Economics Association.
    7. Markus Lampe & Paul Sharp, 2014. "Greasing the wheels of rural transformation? Margarine and the competition for the British butter market," Economic History Review, Economic History Society, vol. 67(3), pages 769-792, August.

    More about this item

    Keywords

    PRIVATE LABELS; PRICING; EMPIRICAL MODELS; FOOD PRODUCTS ; MARQUE DE DISTRIBUTEUR; DIFFERENCIATION DES PRODUITS; PRIX; CONSOMMATION DES MENAGES;

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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