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Consumers' Decision between Private Labels and National Brands in a Retailer's Store: A Mixed Multinomial Logit Application

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  • Bergès-Sennou, Fabian
  • Hassan, Daniel
  • Monier-Dilhan, Sylvette
  • Raynal, Helene

Abstract

We propose to analyze the determinants of consumers' brand decision within a retailer store using a multinomial mixed logit approach. For the consumers' choice, national brands compete with private labels (both me-too product and high quality store brand). We first find that the standard private label (me-too), independently of the price effect, performs better than all national brands in terms of consumers' utility. Second, the high-quality private label does not reach its target yet in term of consumers' acceptance due to a poor product characteristics perception. Last, it appears that households' objective socioeconomic variables (income, education and household size) do not play any role in private label perception, whereas objective consumption behaviour (store loyalty) clearly favours store brand perception. We find that consumers have a lower private label demand elasticity than the low store loyal ones.

Suggested Citation

  • Bergès-Sennou, Fabian & Hassan, Daniel & Monier-Dilhan, Sylvette & Raynal, Helene, 2007. "Consumers' Decision between Private Labels and National Brands in a Retailer's Store: A Mixed Multinomial Logit Application," 103rd Seminar, April 23-25, 2007, Barcelona, Spain 9407, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa103:9407
    DOI: 10.22004/ag.econ.9407
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    References listed on IDEAS

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    1. 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.
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    Cited by:

    1. 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.
    2. Rainer Olbrich & Michael Hundt & Hans Christian Jansen, 2016. "Proliferation of Private Labels in Food Retailing: A Literature Overview," International Journal of Marketing Studies, Canadian Center of Science and Education, vol. 8(6), pages 63-76, December.
    3. Fabian Bergès & Zohra Bouamra-Mechemache, 2012. "Is producing a private label counterproductive for a branded manufacturer?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 39(2), pages 213-239, April.
    4. Johnson, Rutherford Cd., 2016. "A Probabilistic Demand Application In The American Cracker Market," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 4(3), pages 1-13, July.
    5. Fabian Bergès & Sylvette Monier-Dilhan, 2013. "Mass Retailers' Advertising Strategies Against Commodity Stores," Economics Bulletin, AccessEcon, vol. 33(4), pages 2968-2981.
    6. Bergès, Fabian & Monier-Dilhan, Sylvette, 2012. "Mass Retailers’ Advertising Strategies Faced with Different Competitor Store Formats: Commodity Stores or Hard Discounts," TSE Working Papers 12-277, Toulouse School of Economics (TSE).

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