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Market-Based Solutions to Vital Economic Issues
Research
Jul 1, 2016

Let Your Banner Wave? Antecedents and Performance Implications of Retailers’ Private-Label Branding Strategies

Abstract

The authors study the drivers and performance implications of retailers’ branding strategies for their premium and economy private-label tiers. Retailers can opt for store-banner branding and use their store-banner name and/or logo to reveal their ownership, or they can use stand-alone branding and avoid an explicit link between store brand and retail banner. Hypotheses are tested on a large pan-European sample of premium and economy tiers that were introduced over almost 15 years. For the premium tier, retailers’ propensity to use store-banner branding is higher when they have a hi–lo price format and a higher brand equity, and when they have used store-banner branding in the past (on their standard tier and in other markets). The attractiveness of using store-banner branding for the premium tier also varies across countries: it is more likely to be chosen when the retail environment is less concentrated, when uncertainty avoidance and rule of law are higher, and when power distance is lower. For most of these drivers, the effect is significantly weaker for the economy tier. Retailers whose premium-tier branding decision is congruent with the proposed contingency framework perform better. For the economy tier, congruence is not associated with higher performance.


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