European Journal of Marketing Emerald Article: Measuring Private Labels' Brand Equity: A Consumer Perspective Andres Cuneo, Pilar Lopez, Maria Jesus Yague
Article information: To cite this document: Andres Cuneo, Pilar Lopez, Maria Jesus Yague, (2012),"Measuring Private Labels' Brand Equity: A Consumer Perspective", European Journal of Marketing, Vol. 46 Iss: 7 pp. 5 - 5 Downloaded on: 04-04-2012 To copy this document:
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Article Title Page [Article title] Measuring Private Labels Brand Equity: A Consumer Perspective
Author Details (please list these in the order they should appear in the published article) Author 1 Name: Andres Cuneo Department: Escuela de Negocios University/Institution: Universidad Adolfo Ibañez Town/City: Santiago State (US only): Country: Chile
Author 2 Name: Pilar Lopez Department: University/Institution: Universitat Autonoma de Barcelona Town/City: Barcelona State (US only): Country: Spain
Author 3 Name: Maria Jesus Yagüe Department: University/Institution: Universidad Autonoma de Madrid Town/City: Madrid State (US only): Country: Spain
Author 4 Name: Department: University/Institution: Town/City: State (US only): Country:
NOTE: affiliations should appear as the following: Department (if applicable); Institution; City; State (US only); Country. No further information or detail should be included
Corresponding author: [Name] Andres Cuneo Corresponding Author’s Email:
[email protected] Please check this box if you do not wish your email address to be published Acknowledgments (if applicable): The authors gratefully acknowledge the support of Kantar Worldpanel (Spain) and especially of Ms. Raquel Arribas for the data provided for the analysis. We also appreciate the valuable comments and advice from professor Sandra Milberg. This research has counted with the financial support of project ECO2008-00488.
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Structured Abstract: Purpose – To analyse whether private label brands (PLB) have been able to build brand equity throughout their development. Specifically, we develop and test a measurement model that measures PLB brand equity across product lines. Design/methodology/approach – We develop a brand choice model using a multinomial logit model and calibrate it using a consumer panel database of two product lines of yoghurt from 8.000 Spanish households for a 3-year period. Findings – Prior research have considered PLB as the unbranded alternative to manufacturer brands. In this research we provide empirical evidence that PLB have built brand equity throughout their development and that this equity varies across the different PLB offered in the market, and across product lines. Practical implications – These findings offer valuable insights to retailers on how to manage PLB and to manufacturers on how to approach and compete against them. Originality/value – The vast majority of academic research has not approached the PLB phenomenon from a branding perspective. This research constitutes a first attempt to measure brand equity on PLB. We measure PLB brand equity for each typology of PLB in the market. Keywords – Brand equity, brand value, private labels, store brands, choice models, multinomial logit Paper type – Research paper
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Measuring Private Labels Brand Equity: A Consumer Perspective
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Abstract Purpose – To analyse whether private label brands (PLB) have been able to build brand equity throughout their development. Specifically, we develop and test a measurement model that measures PLB brand equity across product lines. Design/methodology/approach – We develop a brand choice model using a multinomial logit model and calibrate it using a consumer panel database of two product lines of yoghurt from 8.000 Spanish households for a 3-year period. Findings – Prior research have considered PLB as the unbranded alternative to manufacturer brands. In this research we provide empirical evidence that PLB have built brand equity throughout their development and that this equity varies across the different PLB offered in the market, and across product lines. Practical implications – These findings offer valuable insights to retailers on how to manage PLB and to manufacturers on how to approach and compete against them. Originality/value – The vast majority of academic research has not approached the PLB phenomenon from a branding perspective. This research constitutes a first attempt to measure brand equity on PLB. We measure PLB brand equity for each typology of PLB in the market. Keywords – Brand equity, brand value, private labels, store brands, choice models, multinomial logit Paper type – Research paper
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Introduction
The growth of Private Label Brands (PLB) in Europe over the last decade has been impressive. The numbers speak for themselves; they are present in more than 90% of the categories of consumer-packaged goods. Market shares across Europe have reached on average 23% (TNS, 2009), but shares are higher in countries such as the UK (46%), Switzerland (45%), Germany (37%) and Spain (33%) (Europanel, 2009). More interestingly, their growth is significantly higher than that experienced by manufacturer brands (18% vs. 4.5%). Moreover, a second important trend in the market is the transformation of PLB, evolving from a low-price/low-quality image to competing vis-à-vis the strongest brands in the market (Kumar and Steenkamp, 2007). In some cases, they have left behind their value propositions based on value-for-money and moved into less functional territories, traditionally owned by brand manufacturers. This is the case of some European retailers such as Tesco, Sainsbury, Ahold or Carrefour, which have developed complex brand architectures and portfolios of PLB, offering basic, premium and even symbolic products to the market (Burt, 2000). Surprisingly, even though the development of PLB is a hot topic in Europe, the attention that it has received from brand researchers is still scarce. The vast majority of academic research has not approached the PLB phenomenon from a branding perspective but, mainly, from the perspective of retailers (Raju et al., 1995; Dhar and Hoch, 1997; Gedenk and Neslin, 1999; Ailawadi and Harlam, 2002, 2004), manufacturers (Hoch and Banerji, 1993; Hoch, 1996; Quelch and Harding, 1996; Rajiv et al., 2002), consumers (Baltas, 1997; Baltas and Argouslidis, 2007; Ailawadi et al., 2008), or from the competitive
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interactions amongst them (Sethuraman, 1996; Cotterill et al., 2000; Ailawadi , Gedenk et al., 2003; Bonfer and Chintagunta, 2004). Moreover, the majority of research papers have considered manufacturer brands as ‘the real thing’ whilst PLB have been associated with the unbranded alternatives to penetrate price sensitive segments. This bias in the research literature may, in part, be explained by the fact that the majority of PLB research has been conducted in the United States. The US market for PLB has significant differences in terms of scale and market structure when compared to Europe (Kapferer, 2005). The situation in Europe shows higher levels of retail concentration, limited number of brands on the shelves, and shorter assortments offered by retailers. These factors have strengthened the power of PLB in Europe and have established a platform over which to acquire brand legitimacy, differentiate from manufacturer brands and deliver value to consumers. However, whether these brands have been able to build brand equity throughout their development is still an open question. In the past, PLB price-points were the main drivers for their growth. After their transformation, there is an open debate among academics and practitioners about whether PLB have been able to build brand equity in the different tiers where they compete. Therefore, the objective of this research is to investigate whether PLB have developed brand equity throughout their evolution. Specifically we develop and test a measurement model that measures PLB brand equity. This is a first step to answer fundamental questions regarding PLB that have, to date, not been thoroughly addressed by brand researchers. We believe that this research will contribute to both academics and practitioners. For academics, it fills a research gap by developing and testing a model that measures PLB brand equity. This is a fundamental and important issue we address to advance the research 4
agenda on PLB. For practitioners, this study provides a better understanding of the ability of PLB to create brand equity. It offers valuable insights to retailers on how to manage PLB and, to manufacturers, on how to compete against them. Further, a brand equity measure for PLB represents a valuable instrument to track PLB performance, either for retailers or manufacturers.
Conceptual background and research propositions
Evolution of PLB PLB have a long history with origins dating back to the 70’s. However, their speed of growth and their transformation are quite a recent phenomenon. Their entry has modified dramatically the competitive dynamics in the marketplace. For many years, retailers were spectators in a market dominated by strong manufacturer brands. Retail fragmentation and media concentration were key factors to foster manufacturer brands growth (Kumar and Steenkamp, 2007). Manufacturer companies took advantage of the market structure and built their brands through aggressive advertising and intensive commercialization strategies (Corstjens and Corstjens, 1995). Nowadays, the situation has changed considerably. Retailers have achieved a dominant position over manufacturers all-around Europe. The process of consolidation of the European retail system has reinforced their competitive position (TNS, 2009). What accounts for PLB evolution? This evolution has been driven by a number of benefits for retailers: 1) increases bargaining power over manufacturers (Farris and Ailawadi, 1992; Pauwels and Srinivasan, 2002), 2) reactivates and expands stagnant categories (Hausser and Shugan, 1983; Scott and Zettelmeyer, 2004), 3) increases revenues,
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as PLB delivers superior margins to those delivered by manufacturer brands (Hoch and Banerji, 1993; Ailawadi and Harlam, 2002, 2004) and, 4) delivers strategic benefits, such as improvement of store image, loyalty and differentiation (Corstjens and Lal, 2000; Ailawadi et al., 2008). The introduction of PLB has led to a shift in manufacturers strategies and in the relationship between manufacturers and retailers. More specifically, it has intensified competition and has led to the need for manufacturers to develop more defensive strategies. More importantly, the entry of PLB represents a shift in the relationship between manufacturers and retailers. The retailer abandons its status of client to become a direct competitor with whom to fight for consumer preference and market share (Pauwels and Srinivasan, 2002). The question that arises for manufacturers is whether PLB are a competitive threat. Findings from several studies suggest that this may not be a concern for manufacturer brands. For example, prior research indicates that consumers are willing to pay premium prices for manufacturer brands because of superior quality cues relative to PLB (Mills, 1995; Narasimhan and Wilcox, 1998). Moreover, when quality cues between PLB and manufacturer brands are considered equal, consumers prefer manufacturer brands because of the utilities derived from the intangible value delivered by them (Sethuraman and Cole, 1997). However, these conclusions are true when referring to predominantly premium manufacturer brands. To the contrary, there is evidence that PLB should be a great concern to manufacturer brands as they do pose a competitive threat at every level of the market. For instance, when compared to second tier brands, consumers show proneness to switch to PLB (Hoch and Lodish, 2003). Hence, second-tier territories represent a fertile ground for 6
PLB development (Sayman et al., 2002). Moreover, most international retailers have started to develop portfolios of PLB using multi-tier strategies to access either new segments of consumers or new territories of legitimacy, such as premium or specialist (Planet Retail, 2007). Interestingly, this development challenges a wide range of manufacturer brands, not only those selling mainstream products but also those targeting specific segments. PLB development represents an important threat for manufacturers, especially if PLB are capable of building brand equity at different tiers. If this is the case, retailers have to embrace a brand management approach. A discipline where retailers become responsible for the procurement, production, commercialisation and promotion of their brands, hence for brand success or brand failure (Dhar and Hoch, 1997). Surprisingly, even though academic research has been investigating PLB from different perspectives, not much attention has been given to PLB from a branding perspective. Considering the evolution and transformation that PLB have gone through, understanding PLB from the perspective of branding theories is something that deserves far more attention (Ailawadi and Keller, 2004). For years companies have been thinking of their brands as intangible assets and the concept of brand equity has been an obsession for marketers and a top research priority for academics. Extensive research has been done around its conceptualisation, management and measurement (Aaker, 1991; Srivastava and Shocker, 1991; Keller, 1993, 2002; Keller and Lehmann, 2003; Kapferer, 2005). However, the focus of this research has been on manufacturer brands, leaving PLB aside. This fact constitutes a clear gap in the research literature. As we point out in this literature review, retailers have started to develop their brands in similar ways as manufacturer brands. Hence, several questions have to be answered with respect to PLB. The measurement 7
model of PLB brand equity that we develop and test will help to answer important strategic questions such as the following: Have PLB been able to build brand equity throughout their development? Or they should still be considered the “unbranded alternative” as prior research has? Is it appropriate to consider PLB as one single group of brands? Or alternatively, consider each PLB as an individual brand that builds its own equity? Does the ability of PLB to build equity vary across product lines or is PLB brand equity stable across product lines? We derive the following research propositions from our literature review and the market data that we have been able to analyse:
Proposition 1: PLB have built brand equity throughout their development. Proposition 2: PLB brand equity varies among the different PLB of the market. Proposition 3: PLB brand equity varies across product lines.
Methodology
Brand equity, is ultimately determined by the consumer. Value is not an objective concept; hence there are many ways of measuring brand value from the consumer’s perspective. The academic literature on brand equity measurements is extensive. Marketing academics have approached brand equity measurements from two perspectives: 1) indirect measurements, focusing on the measurement of brand equity components (Lassar et al., 1995; Yoo and Donthu, 2001; Netemeyer et al., 2004) and direct measurements, focusing on brand equity outcomes (Kamakura and Russell, 1993; Cobb-Walgren et al., 1995; Ailawadi , Lehmann et al., 2003).
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As a first attempt at measuring PLB brand equity, we consider Kamakura and Russell’s (1993) utility method for measuring brand equity the most appropriate since we are interested in measuring PLB equity from the consumer perspective, based on purchase behaviour. This direct measurement of brand equity, estimates brand equity as a component of the global utility delivered by the brand to the consumer, through a brand choice model. The model is based on consumer behaviour and calculates the implicit utility that each brand delivers to the consumer. The data we use comes from a consumer panel, which gathers purchases of a set of 8.000 households in Spain.
Discrete choice models Consumers would choose those brands that offer value to them. Therefore, out of a set of alternatives, they would choose the one that delivers the highest utility. Discrete choice models allow the estimation of brand utilities for consumers. Therefore, these models have been widely used to analyse brand value (Guadagni and Little, 1983, 2008; Kamakura and Russell, 1993). Brand utilities are built based on random utility functions formed by a deterministic part of the utility, defined as a function of the brand or the alternative brand’s attributes (price, promotional activities, advertising expenditures, among others) and a random part that gathers elements of the consumer’s decision, which are not explained by brand attributes. Consumers assign utility functions to brand alternatives when confronted by a choice. A brand is chosen when the consumer obtains a surplus. This is, when the difference between the value assigned to the brand and the price paid for it is positive. This positive difference is defined as the consumer’s surplus
E hjt
as it is stated in the expression [1].
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Ehjt = vhjt − phjt
[1]
where, v hjt represents the value given by a consumer/household, h, to a brand, j, in the moment, t, and phjt is the price paid for it.
If there are J brands (j=1, 2,…J) and they are perfectly substitutable in the occasion, t, consumers will choose the brand, j, that maximizes their utility. Then, the positive difference for the consumer or consumer surplus represents the equity of the brand in the market. Therefore, brand equity measurement is based on the utilities delivered by the brands. Following this approach, we assume that the brand value is compounded of two parts: one that is the average value of brand j in the market, and the other that is a random variable that takes the value that each consumer/household assigns to that brand in that particular moment (see expression [2]).
vhjt = v j + π hjt
[2]
where, v j represents the average value given to the brand by the market, and π hjt is a random variable.
We represent the random variable with the form: π hjt =
1
β
ε hjt where, β is a parameter,
and ε hjt is an independent random term equally distributed among the brands. Based on equations [1] and [2], we define a random utility function that is estimated by the following Multinomial Logit Model (MNL) (Guadagni and Little, 1983, 2008):
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β Ehjt = β v j − β phjt + ε hjt where U hjt = β Ehjt and α j = β v j , that is to say,
U hjt = α j − β phjt + ε hjt
[3]
MNL models have been widely used in marketing literature to explain brand choice either from households or individuals (Russell and Kamakura, 1994; Gupta et al., 1996; Song and Chintagunta, 2006; Song and Chintagunta, 2007). In this case, β represents the sensitivity to the price of the utility, and α j the intrinsic utility of the brand. This utility or intrinsic preference, when divided by the β coefficient, indicates the relation between the utility and the price that reflects the average value of the brand, j, ( v j =
αj ), accordingly to what was set out previously. β
From the brand utility function (equation [3]), the probability of choosing a brand can be set out through the following equation (Mc Fadden, 1984): (McFadden, 1984)
Probhjt =
expU hjt J
∑ expU
[4]
hjt
j =1
Where Uhjt is the determinist component of the utility of the brand j on the purchase occasion t for household h according to the expression [3].
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Description of the data The data analysed consists of 150 weeks of consumer panel purchases of yoghurts in Spain, collected by Kantar Worldpanel (former TNS), spanning from January 2005 to November 2008. This panel covers purchases made by a panel of 8,000 Spanish households all-around Spain selected through a stratified random sampling. Out of the data obtained for each purchase, the following information was considered: (a) brand chosen (b) product type chosen (c) unit price paid at the time of the purchase (converted to the standard unit of 125grs.) (d) advertising pressure (measured as the number of GRP’s invested by each brand monthly)
To test our model we chose the yoghurt market in Spain. This choice was made for several reasons. On the one hand, it is a mature market. It is one of the categories in which PLB have grown the most in the last few years, reaching a market share in 2008 of 45.5% (Alimarket, 2008). There exists a widely developed offer in terms of brands and breath of product lines, spanning from functional to symbolic benefits for the consumer. However, two main product lines account for the largest part of the volume; “regular” (72.4%), which stand for basic product ranges, and “functional” products (27.3%) which correspond to products that deliver “high-end healthy” benefits for the consumer. On the other hand, the yoghurt market has gone through a strong process of concentration in terms of brands and distribution systems. The brand offer is strongly polarised between the leading manufacturer brand (SOM: 47%) and PLB (SOM: 46%). The remainder of the market is
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controlled by a set of regional manufacturers and niche players. Interestingly, the range of PLB is wide and the performance of two of them is remarkable, reaching a jointly 30% of the market. Distribution systems are also concentrated, with three channels accounting for close to 100% of the sales volume; supermarkets (57.1%), hypermarkets (17.8%) and discount stores (23.2%). Three retail chains account for almost 50% of the purchases of yoghurt. Thus, there is fierce competition between manufacturer brands and PLB. For the purposes of this research and the propositions to be investigated we split the database in two groups: “regular” yoghurts and “functional” yoghurts. We do this to measure equity across product categories with different levels of involvement, assuming “basic” yoghurts as low involvement products and “functional” yoghurts as high involvement products. The first one consists of 122,258 purchases made by 1,636 households throughout the period of analysis; the second one consists of 66,861 purchases made by 933 households throughout the same time period. A household was selected if it made more than 20 purchases during the period of analysis in each product line.
Analysis
The analysis focuses on eight alternatives. We individualise the leading manufacturer brand (LMB), five PLB (PLB1…PLB5) and create two additional categories, a composite “other manufacturer brands (OMB)” for manufacturer brands with less than 1.5% and a composite “other PLB (OPL)” for PLB with less than 1.0% (see Table 1). This last group of brands is assimilated to the generic product type (utility-0).
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Table.1. Description of the databases
Product type Observations Panelists Alternatives:
Regular 122,258 1,636 Brand LMB PLB1 PLB2 PLB3 PLB4 PLB5 OMB OPL
Functional 66,861 933 Store type Supermarket Discount Hypermarket Supermarket Hypermarket various
Brand strategy Sub-branding Different from store brand Same from store brand Same from store brand Same from store brand Different from store brand Various
The leading manufacturer brand (LMB) has a strong market leadership in both product lines: “regular” and “functional”, but considerably higher in the “functional” product line. On PLB, two brands get together the largest part of PLB share. In “regular”, PLB2 has a share of 17.8 %, but in “functional” it drops to 10.7%. On the other side PLB3, has a share of 12.6% in “regular” but its position in the “functional” is slightly higher (13.7%). The rest of the brands vary between 6.7% and 1.0%. Table 2 shows, shows market shares and average prices. As it is expected, price levels for “regular” yoghurts are lower than for “functional”, because of the differentiation between both product lines. Regarding brands, PLB price-points are also lower than manufacturer brands. Table 2. Database descriptives
LMF PLB1 PLB2 PLB3 PLB4 PLB5 OMB OPL
SOM (%)
Regular Unit price
S.D.
SOM (%)
Functional Unit price
S.D.
39.4 1.,6 17.8 3.7 3.5 2.0 10.0 10.5
0.300 0.138 0.173 0.133 0.133 0.130 0.324 0.142
0.07 0.01 0.04 0.01 0.01 0.01 0.05 0.01
60.8 13.7 10.7 2.2 6.7 1.0 2.7 2.2
0.442 0.235 0.198 2.17 0.213 0.206 0.388 0.208
0.05 0.02 0.02 0.02 0.01 0.01 0.03 0.02
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Model specification and results We define the following model specification to illustrate the utility given by a consumer, h, to a brand, j, in a moment, t, as:
U
hjt
=α j + β
p
P
hjt
+
β BL BL
hjt
+β
GRP
GRP + ε jt
hjt
Where:
αj
component of brand equity for brand j
p hjt
unit price paid for the brand j by the consumer h at the time t
BL hjt
represents brand loyalty of the consumer h towards brand j
GRPjt
Gross rating points invested by brand j in moment t
ε hjt
random part of the utility delivered by brand j to the consumer h in moment t, which is not explained by any of the variables used by the model
To study the contribution of each variable to the probability of choice we estimate the model in a progressive way until reaching the final model that has been defined above. Table 3 shows the results only of the final model, out of the five different specifications that were run for both databases. The interpretation of the coefficients is not a direct one. Coefficients do not indicate probabilities of choice. However, the signs of the coefficients do indicate magnitudes and the direction of the change. Whether the sign is positive or negative depends on whether the brand delivers more or less utility compared to the brand that is considered utility-0 or generic (OPL). Hence, a positive coefficient signals brand equity creation. To the contrary, a negative coefficient represent that the brand has not been able to build equity over the generic brand alternative.
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Table 3. Results of the MNL
Variable
“regular”
“functional”
α_LMB
-0.241*** (0.021) -0.721*** (0.026) -0.657*** (0.026) -1.119*** (0.023) -1.676*** (0.032) -1.278*** (0.024) -0.335*** (0.030) -1.667*** (0.091) 4.993*** (0.015) 0.906 (0.662)
0.902*** (0.068) 0.311*** (0.052) 0.037 (0.052) -0.405*** (0.048) -1.123*** (0.065) -0.104*** (0.045) 0.297*** (0.071) -2.341*** (0.251) 4.824*** (0.022) 0.137 (0.113)
-100384.1 0,524 122.258
-32496.9 0,628 66.861
α_PLB1 α_PLB2 α_PLB3 α_PLB4 α_PLB5 α_OBM β_Price β _Loyalty β _GRP's
Log-likelihood R-Sqrd adjusted Observations * > 0.1 ** > 0.05 *** > 0.001
Results from the “functional” product line show that four brands have been able to build equity; the LBM, the composite OBM and two PLB. The LMB, drives preference in this market representing the highest utility for consumers (0.902), far from the 0.297 showed by OMB. Interestingly, the second brand with most value in this market is a PLB. PLB1 (0.311) has even higher value than other manufacturer brands, which are followed by PLB2 (0.037). The rest of PLB are not able to build brand equity in this product line and
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remain in an uncertain position regarding the role they want to perform in the marketplace. These results lend support to propositions 1 and 2, showing that some PLB have been able to build brand equity and that brand equity varies (increase/decrease) across product lines. However, when we analyse results from the “regular” product line the picture is considerably different. In this product line, none of the brands in the market have been able to create superior utilities for consumers (brand equity) to those delivered by generic brands (OPL). Nevertheless, the results indicate that the negative effects for the equity of all brands is not equal. Specifically, the negative effects on manufacturer brand equities are less than those of PLB (LMB: -0.241 and OBM:-0.335). Interestingly, when analysing PLB competition, results presents high variability within PLB. Two PLB are considerably detached from the rest PLB1 (-0.721) and PLB2 (-0.657) have much higher values than other PLB. These results support proposition 3, showing that PLB brand equity varies across product lines. Moreover, comparing results from “functional” and “regular” we can further support proposition 2 as brand equity varies. In addition, several other interesting results emerged from the analyses. In relation with the values obtained from the parameters of the explanatory variables, the effect of brand loyalty is remarkable. This coefficient provides evidence that loyalty has a large effect on brand choice, affecting brand choice positively for both product lines; “regular” (4.993) and “functional” (4.824). Price is also a relevant variable that affects brand choice, however, negatively. Interestingly, the effect is higher on “functional” yoghurts (-2.341) than on “regular” (-1.667). Advertising pressure, measured in terms of the GRP’s invested by the brands, has a positive effect on brand choice, both for “regular” and “functional”, as might be expected, however, is not statistically significant.
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In order to measure the goodness of fit of the models and to identify significant differences between them, we used the Log-Likelihood and R2 adjusted, as well as the loglikelihood statistic tests to compare the models. For “regular” yoghurts the value for the statistic R2 adjusted is 0.529 but it improves considerably in the case of “functional” yoghurts. Therefore, both models could be considered to have an acceptable goodness of fit.
Discussion
PLB are a major issue throughout Europe. Understanding PLB from the perspective of branding theories contributes to both academics and practitioners. For academics it fills a critical research gap. To our knowledge, no brand equity measure of PLB has been developed to date. This is a fundamental and important issue to address, prior to conducting further research on PLB from a branding perspective. The results that we provide from the different models analysed in this study, confirm that PLB have built brand equity throughout their development. However, there are considerable differences across different product lines. Those product lines with high levels of differentiation represent an opportunity for PLB to build brand equity. To the contrary, in less differentiated product lines building brand equity represent a challenge for PLB as well as for manufacturer brands. In those product lines where either perceived risk exist or where brand confidence is relevant for consumers to believe the benefits of the products (“functional”), the capitalisation of brand value is evident. However, in product categories where shopping is done routinely (“regular”), consumer preferences and loyal behaviours seem to be a direct consequence of
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past experiences with the brand or the reactions to marketing actions, such as pricing or communication. Our results also show high variability on brand equities. Not only across product lines but also within the different PLB competing in the market. Interesting conclusions can be drawn from this fact. On the one hand, from the consumer perspective there are no differences between PLB and manufacturer brands. Differences are made only when evaluating brand utilities. For the consumer, all brands are alternatives to be evaluated when confronted to a brand choice. Whether the brand is owned by a retailer or a manufacturer seems to be irrelevant for the consumer. On the other hand, this finding has clear implications for researchers. Prior research on PLB have considered PLB as one single category. Our research indicates that PLB brand equity is built individually, therefore treating PLB as one single composite of brands should be avoided in future studies. These findings make evident that theories of PLB should be revisited, incorporating the fact that PLB have brand equity. They no longer represent just the price alternative to consumers. It is imperative that retailers and manufacturers are conscious of this shift. Retailers should also be aware that developing portfolios of PLB and complex brand architectures require that they enter the domain of brand management. This new approach represents a challenge in their approach to managing the business. Brand management requires not only additional skills but also a new management vision. The measure of brand equity that we have developed represents a valuable tool for them to measure whether their PLB have created brand equity across product lines. For retailers, it would, no doubt become a must to track PLB performance over time. On the other side, manufacturers have wondered whether PLB represent a competitive threat to their brands. This is a reality. They must become aware that they are competing against ‘real brands’ (with equity), in 19
fact, PLB are able to compete in the same territories where manufacturer brands have been historically dominant. Hence, brand managers should change their vision on PLB and revisit their branding strategies to compete successfully against them. Even though this study reveals that PLB have built brand equity, we should point out some limitations that could drive future research directions. We test the research propositions on the yoghurt market in Spain. However, to generalise our results further research should consider other product categories and other countries, where PLB are at different stages of development. Although consumer panels provide a good set of data to measure brand equity from a behavioural point of view, the introduction of some attitudinal variables would certainly provide more insights about the components of PLB brand equity from the consumer perspective. Similarly, using the socio-demographic data from the panel could be useful to analyse PLB brand equity across segments of consumers. In conclusion, this research constitutes a first attempt to understand PLB from the perspective of brand theories, however there are many open questions to be tackled in future. We are positive that conducting research on PLB from a branding perspective should become indeed, a fruitful stream for future research.
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