IDEAS home Printed from https://ideas.repec.org/p/ags/aaea16/236070.html
   My bibliography  Save this paper

The Consumer Paradox: Why Bottom-Tier Consumers Are Loyal To Brand Names

Author

Listed:
  • Pasirayi, Simba
  • Grebitus, Carola

Abstract

Recent studies on private labels find that store brand consumers tend to be middle income, educated, older consumers with large families. Moreover, low-income households that have the same needs as wealthier households do not economize by buying a greater proportion of private-label products. Instead they prefer higher priced national brands even in recessionary times. In this research study we employ the reference group theory to explain this counterintuitive phenomenon. Results show that low-income households are upward comparing, that is, they contrast themselves with high-income households whom they believe are better-off. These comparisons result in preference for national brands. In addition, we find that low income consumers know little about advances in private labels which also explains why they prefer national brands. Last, we find that our results are also consistent in emerging economies.

Suggested Citation

  • Pasirayi, Simba & Grebitus, Carola, 2016. "The Consumer Paradox: Why Bottom-Tier Consumers Are Loyal To Brand Names," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236070, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:236070
    DOI: 10.22004/ag.econ.236070
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/236070/files/The%20Consumer%20Paradox%20Why%20Bottom%20Tier%20Consumers%20Are%20Loyal%20To%20Brand%20Names.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.236070?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jennifer J. Argo & Darren W. Dahl & Rajesh V. Manchanda, 2005. "The Influence of a Mere Social Presence in a Retail Context," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 32(2), pages 207-212, September.
    2. Abhijit V. Banerjee & Esther Duflo, 2007. "The Economic Lives of the Poor," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 141-168, Winter.
    3. Bart J. Bronnenberg & Jean-Pierre Dubé & Matthew Gentzkow & Jesse M. Shapiro, 2015. "Do Pharmacists Buy Bayer? Informed Shoppers and the Brand Premium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(4), pages 1669-1726.
    4. Childers, Terry L & Rao, Akshay R, 1992. "The Influence of Familial and Peer-Based Reference Groups on Consumer Decisions," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 19(2), pages 198-211, September.
    5. Jennifer J. Argo & Kelley J. Main, 2008. "Stigma by Association in Coupon Redemption: Looking Cheap because of Others," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 35(4), pages 559-572, July.
    6. Niels Van de Ven & Marcel Zeelenberg & Rik Pieters, 2011. "The Envy Premium in Product Evaluation," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 37(6), pages 984-998.
    7. Kaufman, Phillip R. & MacDonald, James M. & Lutz, Steve M. & Smallwood, David M., 1997. "Do the Poor Pay More for Food? Item Selection and Price Differences Affect Low-Income Household Food Costs," Agricultural Economic Reports 34065, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhang, Mingyue & Zhao, Haichuan & Chen, Haipeng (Allan), 2022. "How much is a picture worth? Online review picture background and its impact on purchase intention," Journal of Business Research, Elsevier, vol. 139(C), pages 134-144.
    2. Argo, Jennifer J. & Dahl, Darren W., 2020. "Social Influence in the Retail Context: A Contemporary Review of the Literature," Journal of Retailing, Elsevier, vol. 96(1), pages 25-39.
    3. Didem Kurt & Francesca Gino, 2023. "Income inequality and consumer preference for private labels versus national brands," Journal of the Academy of Marketing Science, Springer, vol. 51(2), pages 463-479, March.
    4. Lamberto Zollo, 2021. "The Consumers’ Emotional Dog Learns to Persuade Its Rational Tail: Toward a Social Intuitionist Framework of Ethical Consumption," Journal of Business Ethics, Springer, vol. 168(2), pages 295-313, January.
    5. Philp, Matthew & Nepomuceno, Marcelo Vinhal, 2024. "How reviews influence product usage post-purchase: An examination of video game playtime," Journal of Business Research, Elsevier, vol. 172(C).
    6. Zheng, Xiaoying & Baskin, Ernest & Peng, Siqing, 2018. "Feeling inferior, showing off: The effect of nonmaterial social comparisons on conspicuous consumption," Journal of Business Research, Elsevier, vol. 90(C), pages 196-205.
    7. Luck, Michael & Benkenstein, Martin, 2015. "Consumers between supermarket shelves: The influence of inter-personal distance on consumer behavior," Journal of Retailing and Consumer Services, Elsevier, vol. 26(C), pages 104-114.
    8. Alfis S. Gayazov & Gulnara F. Zamaletdinova & Artur F. Amirov & Andrey V. Kostryukov & Evgeniya I. Tikhomirova, 2016. "Modern Teaching Tendencies of Critical Thinking Forming of University Students," International Review of Management and Marketing, Econjournals, vol. 6(2), pages 358-363.
    9. Hannah Pieters & Andrea Guariso & Anneleen Vandeplas, 2013. "Conceptual framework for the analysis of the determinants of food and nutrition security," FOODSECURE Working papers 13, LEI Wageningen UR.
    10. Jaya Jumrani & P. S. Birthal, 2017. "Does consumption of tobacco and alcohol affect household food security? Evidence from rural India," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 9(2), pages 255-279, April.
    11. Benito Arruñada & Marco Fabbri & Michael Faure, 2022. "Land Titling and Litigation," Journal of Law and Economics, University of Chicago Press, vol. 65(1), pages 131-156.
    12. Sugathan, Praveen & Ranjan, Kumar Rakesh, 2020. "When co-production fails: The role of customer’s internal attributions and impression management concerns," Journal of Business Research, Elsevier, vol. 121(C), pages 535-548.
    13. Pascaline Dupas & Sarah Green & Anthony Keats & Jonathan Robinson, 2014. "Challenges in Banking the Rural Poor: Evidence from Kenya's Western Province," NBER Chapters, in: African Successes, Volume III: Modernization and Development, pages 63-101, National Bureau of Economic Research, Inc.
    14. Gibson, John & Kim, Bonggeun, 2013. "Do the urban poor face higher food prices? Evidence from Vietnam," Food Policy, Elsevier, vol. 41(C), pages 193-203.
    15. Gary S. Fields, 2020. "Informality and work status," WIDER Working Paper Series wp-2020-159, World Institute for Development Economic Research (UNU-WIDER).
    16. Hai‐Anh H. Dang & Elena Ianchovichina, 2018. "Welfare Dynamics With Synthetic Panels: The Case of the Arab World In Transition," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(s1), pages 114-144, October.
    17. Risa Nakamura & Akiyuki Kawasaki, 2022. "Quantitative Evaluation of Flood Control Measures and Educational Support to Reduce Disaster Vulnerability of the Poor Based on Household-level Savings Estimates," Economics of Disasters and Climate Change, Springer, vol. 6(2), pages 355-371, July.
    18. Picarelli, Nathalie, 2016. "Who really benefits from export processing zones? Evidence from Nicaraguan municipalities," Labour Economics, Elsevier, vol. 41(C), pages 318-332.
    19. Hamidou Jawara, 2020. "Access to savings and household welfare evidence from a household survey in The Gambia," African Development Review, African Development Bank, vol. 32(2), pages 138-149, June.
    20. Brian McCaig & Nina Pavcnik, 2015. "Informal Employment in a Growing and Globalizing Low-Income Country," American Economic Review, American Economic Association, vol. 105(5), pages 545-550, May.

    More about this item

    Keywords

    Consumer/Household Economics; Marketing;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea16:236070. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.