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

48 Pages Posted: 5 Nov 2018

See all articles by Bart J. Bronnenberg

Bart J. Bronnenberg

Tilburg University, CentER

Jean-Pierre Dubé

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

Robert E. Sanders

University of California, San Diego (UCSD) - Rady School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: November 2018

Abstract

We run in-store blind taste tests with 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 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 show these effects survive controls for point-of-purchase prices, purchase incidence, and the feedback effects of brand loyalty. We also find that the intervention increases the preference for the private label brands, and that it 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.

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Suggested Citation

Bronnenberg, Bart J. and Dube, Jean-Pierre H. and Sanders, Robert E., Consumer Misinformation and the Brand Premium: A Private Label Blind Taste Test (November 2018). NBER Working Paper No. w25214. Available at SSRN: https://ssrn.com/abstract=3278514

Bart J. Bronnenberg (Contact Author)

Tilburg University, CentER ( email )

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

Jean-Pierre H. Dube

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
United States

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

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

Robert E. Sanders

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

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

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