Testing the Traditional View of National Brands and Store Brands: A Comparison of Response Elasticities and Intangible Brand Effects

51 Pages Posted: 10 Feb 2015

See all articles by Sudhir Voleti

Sudhir Voleti

Indian School of Business (ISB), Hyderabad

Raj Sethuraman

Southern Methodist University (SMU) - Marketing Department

Date Written: May 2013

Abstract

National brands in grocery products are traditionally viewed as higher-quality, higher-priced, image-oriented brands while store brands are viewed as lower-quality, lower-priced, value-oriented brands. This traditional view suggests that national brands are less own price elastic, more promotion elastic, and have higher intangible brand effect (brand equity) than store brands. This research tests this traditional view using a dataset comprising of 18 brands from five retail chains, 424 SKUs and 24,260 observations that account for over 90% of the Carbonated Soft Drinks category sales. The analysis permits us to explore brand, retailer, and subcategory differences related to the above expectations. Our results indicate that, on aggregate, there are no significant differences in response elasticities between national brands and store brands. This finding also holds for intangible brand effects. However, leading national brands in popular subcategories conform to a large extent to the traditional view of being less price elastic, more promotion elastic, and having higher intangible brand effects than store brands. Implications of these findings for managers and directions for future research are discussed.

Keywords: Private labels, Store brands, Brand competition, Market response

Suggested Citation

Voleti, Sudhir and Sethuraman, Raj, Testing the Traditional View of National Brands and Store Brands: A Comparison of Response Elasticities and Intangible Brand Effects (May 2013). Indian School of Business Research Paper Series. Available at SSRN: https://ssrn.com/abstract=2562209 or http://dx.doi.org/10.2139/ssrn.2562209

Sudhir Voleti (Contact Author)

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

Raj Sethuraman

Southern Methodist University (SMU) - Marketing Department ( email )

United States

Register to save articles to
your library

Register

Paper statistics

Downloads
46
Abstract Views
394
PlumX Metrics