Consumer Misinformation and the Brand Premium: A Private Label Blind Taste Test

48 Pages Posted: 17 Oct 2018

See all articles by Jean-Pierre Dubé

Jean-Pierre Dubé

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Bart J. Bronnenberg

Tilburg University, CentER

Robert E. Sanders

University of California, San Diego, Rady School of Management

Date Written: September 21, 2018

Abstract

We run in-store blind taste tests between a retailer's private label food brands and the leading national brand counterparts in three large CPG categories. In a survey administered during the taste test, subjects self-report very high expectations about the relative quality of the private labels relative to national brands. However, they predict a relatively low probability of choosing them in a blind taste test. Surprisingly however, an overwhelming majority systematically chooses the private label in the blinded test. During the week after the intervention, the tested private label product market shares increase by 15 share points, on top of a base share of 8 share points. However, the effect diminishes to 8 share points during the second to fourth week after the test, and to 2 share points during the second to fifth month after the test. Using a structural model of demand, we find that the intervention increases the preference for the private label brands, but decreases the preference for the national brands, relative to the outside good. The findings are consistent with a treatment effect of information on demand where the memory for this information decays slowly over time. Alternative explanations to the information treatment are ruled out.

Keywords: Private Label, Brand, information, demand

JEL Classification: L11, L15, M31, M37

Suggested Citation

Dube, Jean-Pierre H. and Bronnenberg, Bart J. and Sanders, Robert E., Consumer Misinformation and the Brand Premium: A Private Label Blind Taste Test (September 21, 2018). Available at SSRN: https://ssrn.com/abstract=3253412 or http://dx.doi.org/10.2139/ssrn.3253412

Jean-Pierre H. Dube (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 South Woodlawn Avenue
Chicago, IL 60637
United States

HOME PAGE: http://gsb.uchicago.edu/fac/jean-pierre.dube

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Bart J. Bronnenberg

Tilburg University, CentER ( email )

Warandelaan 2
Tilburg, 5037 AB
Netherlands
+31 13 466 8939 (Phone)
+31 13 466 8354 (Fax)

Robert E. Sanders

University of California, San Diego, Rady School of Management ( email )

9500 Gilman Drive #0553
Wells Fargo Hall, 3W106
SAN DIEGO, CA 92093-0553
United States
8184973597 (Phone)
92116 (Fax)

HOME PAGE: http://robertesanders.com

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