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Research Note--Are Store-Brand Buyers Store Loyal? An Empirical Investigation

Author

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  • Karsten Hansen

    (Kellogg School of Management, Northwestern University, Evanston, Illinois 60208)

  • Vishal Singh

    (Stern School of Business, New York University, New York, New York 10012)

Abstract

This paper tests the notion of whether high preference for store brands leads to higher store loyalty. Our work differs from the earlier empirical evidence on this issue in how we define and measure the two key constructs: store-brand loyalty and store loyalty. To measure store-brand preference, we develop a multicategory brand choice to elicit the basic latent tendency for a household to buy store brands, while controlling for other factors such as price sensitivity. The household-specific measures on store-brand preference and price sensitivity (along with other control variables) are then used to assess household store loyalty in the context of entry by a Wal-Mart supercenter in the market. Results show that store-brand buying behavior is driven by households' underlying "value trait" over and beyond what is captured by price sensitivity alone. In addition, these value-oriented households, which show high preference for store brands in the pre-entry period, shift a significantly higher level of their expenditures to Wal-Mart. These results are in contradiction to the conventional wisdom that high store-brand patronage is associated with a higher level of store loyalty. However, this finding comes with the caveat that the entrant analyzed in the paper has a well-defined "value" positioning and might not hold if the new entrant does not dominate the incumbent in the value proposition. Implications for supermarket managers in a more general context are discussed.

Suggested Citation

  • Karsten Hansen & Vishal Singh, 2008. "Research Note--Are Store-Brand Buyers Store Loyal? An Empirical Investigation," Management Science, INFORMS, vol. 54(10), pages 1828-1834, October.
    • Handle: RePEc:inm:ormnsc:v:54:y:2008:i:10:p:1828-1834
    DOI: 10.1287/mnsc.1080.0861
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    References listed on IDEAS

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    1. Sanjay K. Dhar & Stephen J. Hoch, 1997. "Why Store Brand Penetration Varies by Retailer," Marketing Science, INFORMS, vol. 16(3), pages 208-227.
    2. Elrod, Terry & Keane, Michael, 1995. "A Factor-Analytic Probit Model for Representing the Market Structure in Panel Data," MPRA Paper 52434, University Library of Munich, Germany.
    3. K. Sudhir & Debabrata Talukdar, 2004. "Does Store Brand Patronage Improve Store Patronage?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(2), pages 143-160, March.
    4. Andrew Ainslie & Peter E. Rossi, 1998. "Similarities in Choice Behavior Across Product Categories," Marketing Science, INFORMS, vol. 17(2), pages 91-106.
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    Citations

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    Cited by:

    1. Szymanowski, M.G., 2009. "Consumption-based learning about brand quality : Essays on how private labels share and borrow reputation," Other publications TiSEM b12825d8-5e21-4437-adda-b, Tilburg University, School of Economics and Management.
    2. Mercedes Martos-Partal & Óscar González-Benito, 2011. "Store brand and store loyalty: The moderating role of store brand positioning," Marketing Letters, Springer, vol. 22(3), pages 297-313, September.
    3. Larson, Ronald B., 2016. "Profiling Private-Label Avoiders," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235823, Agricultural and Applied Economics Association.
    4. Vroegrijk, Mark & Gijsbrechts, Els & Campo, Katia, 2016. "Battling for the Household's Category Buck: Can Economy Private Labels Defend Supermarkets Against the Hard-Discounter Threat?," Journal of Retailing, Elsevier, vol. 92(3), pages 300-318.
    5. İpek, İlayda & Aşkın, Nilay & İlter, Burcu, 2016. "Private label usage and store loyalty: The moderating impact of shopping value," Journal of Retailing and Consumer Services, Elsevier, vol. 31(C), pages 72-79.
    6. Óscar González-Benito & Mercedes Martos-Partal, 2014. "Price sensitivity versus perceived quality: moderating effects of retailer positioning on private label consumption," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 15(5), pages 935-950, November.
    7. Ailawadi, K.H. & Bradlow, E.T. & Draganska, M. & Nijs, V. & Rooderkerk, R.P. & Sudhir, K. & Wilbur, K.C. & Zhang, J., 2010. "Empirical models of manufacturer-retailer interaction : A review and agenda for future research," Other publications TiSEM 8cf81b4a-f2e9-485b-a5f5-9, Tilburg University, School of Economics and Management.
    8. González-Benito, Óscar & Martos-Partal, Mercedes, 2012. "Role of Retailer Positioning and Product Category on the Relationship Between Store Brand Consumption and Store Loyalty," Journal of Retailing, Elsevier, vol. 88(2), pages 236-249.
    9. Satheesh Seenivasan & K. Sudhir & Debabrata Talukdar, 2016. "Do Store Brands Aid Store Loyalty?," Management Science, INFORMS, vol. 62(3), pages 802-816, March.
    10. 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.

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