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Social consumption and price rigidity of quality-tier differentiated private labels

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  • Sven Anders
  • Milena Beye

Abstract

We are interested in the extent to which quality-tier differentiation of private label (PL) contributes to explaining their greater price rigidity during holiday periods, when social consumption motives may influence retailer category management. After controlling for wholesale cost pass-through, product and store effects, we find social consumption theory to provide the best explanation for greater PL price rigidity during the Christmas period. Although this effect does not extend to other periods of peak demand or across product categories, our results underscore the importance of consumer considerations in firm-level price setting discussed by Blinder et al . (1998). More generally, this article emphasizes the growing importance of quality-tier differentiated PLs in retailer's pricing and promotional strategies.

Suggested Citation

  • Sven Anders & Milena Beye, 2015. "Social consumption and price rigidity of quality-tier differentiated private labels," Applied Economics Letters, Taylor & Francis Journals, vol. 22(11), pages 911-915, July.
    • Handle: RePEc:taf:apeclt:v:22:y:2015:i:11:p:911-915
    DOI: 10.1080/13504851.2014.987910
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    1. Levy, Daniel & Müller, Georg & Chen, Haipeng (Allan) & Bergen, Mark & Dutta, Shantanu, 2010. "Holiday Price Rigidity and Cost of Price Adjustment," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 77(305), pages 172-198.
    2. Müller, Georg & Bergen, Mark & Dutta, Shantanu & Levy, Daniel, 2006. "Private Label Price Rigidity during Holiday Periods," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 13(1), pages 57-62.
    3. Judith A. Chevalier & Anil K. Kashyap & Peter E. Rossi, 2003. "Why Don't Prices Rise During Periods of Peak Demand? Evidence from Scanner Data," American Economic Review, American Economic Association, vol. 93(1), pages 15-37, March.
    4. ter Braak, Anne & Geyskens, Inge & Dekimpe, Marnik G., 2014. "Taking private labels upmarket: Empirical generalizations on category drivers of premium private label introductions," Journal of Retailing, Elsevier, vol. 90(2), pages 125-140.
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    Cited by:

    1. Bittmann, Thomas & Loy, Jens-Peter & Anders, Sven, 2017. "Cost Pass-Through And Product Differentiation," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261145, European Association of Agricultural Economists.

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