Private-Label Use and Store Loyalty

Abstract The authors develop an econometric model of the relationship between a household's private-label (PL) share and its behavioral store loyalty. The model includes major drivers of these two behaviors and controls for simultaneity and nonlinearity in the relationship between them. The model is estimated with a unique data set that combines complete purchase records of a panel of Dutch households with demographic and psychographic data. The authors estimate the model for two retail chains in the Netherlands—the leading service chain with a well-differentiated high-share PL and the leading value chain with a lower-share PL. They find that PL share significantly affects all three measures of behavioral loyalty in the study: share of wallet, share of items purchased, and share of shopping trips. In addition, behavioral loyalty has a significant effect on PL share. For the service chain, the authors find that both effects are in the form of an inverted U. For the value chain, the effects are positive and...

[1]  Stephen J. Hoch,et al.  Why Store Brand Penetration Varies by Retailer , 1997 .

[2]  S. West,et al.  Multiple Regression: Testing and Interpreting Interactions. , 1994 .

[3]  Kusum L. Ailawadi,et al.  An Empirical Analysis of the Determinants of Retail Margins: The Role of Store-Brand Share , 2004 .

[4]  R. Lal,et al.  Building Store Loyalty through Store Brands , 2000 .

[5]  R. Sethuraman.  The effect of marketplace factors on private label penetration in grocery products , 1992 .

[6]  Hans Baumgartner,et al.  An Extended Paradigm for Measurement Analysis of Marketing Constructs Applicable to Panel Data , 2006 .

[7]  Franklin M. Fisher,et al.  IDENTIFIABILITY CRITERIA IN NONLINEAR SYSTEMS , 1961 .

[8]  Pradeep K. Chintagunta,et al.  Store Brands: Who Buys Them and What Happens to Retail Prices When They Are Introduced? , 2004 .

[9]  E. Gijsbrechts,et al.  Conditional cross-brand learning: When are private labels really private? , 2007 .

[10]  K. Sudhir,et al.  Does Store Brand Patronage Improve Store Patronage? , 2004 .

[11]  Arun K. Jain,et al.  Household store brand proneness: A framework , 1996 .

[12]  Scott A. Neslin,et al.  Pursuing the Value-Conscious Consumer: Store Brands versus National Brand Promotions , 2001 .

[13]  Ronald T. Wilcox,et al.  Private-Labels and the Channel Relationship: A Cross-Category Analysis , 1998 .

[14]  Franklin M. Fisher,et al.  Identifiability Criteria in Nonlinear Systems: A Further Note , 1965 .

[15]  Harry H. Kelejian,et al.  Two-Stage Least Squares and Econometric Systems Linear in Parameters but Nonlinear in the Endogenous Variables , 1971 .

[16]  H. Assael.  Consumer behavior and marketing action , 1981 .

[17]  Koen Pauwels,et al.  Who Benefits from Store Brand Entry , 2004 .

[18]  Paul S. Richardson.  Are store brands perceived to be just another brand , 1997 .

[19]  J. Steenkamp,et al.  Private Label Strategy: How to Meet the Store Brand Challenge , 2007 .

[20]  Kevin Lane Keller,et al.  Understanding retail branding: conceptual insights and research priorities , 2004 .

[21]  Jeffrey M. Wooldridge,et al.  Solutions Manual and Supplementary Materials for Econometric Analysis of Cross Section and Panel Data , 2003 .

[22]  Michel Wedel,et al.  Segmenting retail markets on store image using a consumer-based methodology , 1991 .

[23]  Jacob Cohen,et al.  Applied multiple regression/correlation analysis for the behavioral sciences , 1979 .

[24]  Marnik G. Dekimpe,et al.  The increasing power of store brands: Building loyalty and market share , 1997 .

[25]  Robert C. Blattberg,et al.  Market Entry and Consumer Behavior: An Investigation of a Wal-Mart Supercenter , 2006 .