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Do consumers benefit from private label development?

Paolo Sckokai () and Claudio Soregaroli ()

No 10068, 98th Seminar, June 29-July 2, 2006, Chania, Crete, Greece from European Association of Agricultural Economists

Abstract: In the European food sector private labels represent a relevant and increasing share of total sales. Thus, national brands need to adapt their marketing strategies to deal with this growing competition. Focusing on price strategies, recent theoretical papers conclude that private label development should cause a decrease in the price of national brands, while some empirical studies do not support this prediction. The aim of this study is to explore this empirical relationship for the Italian food retail sector, which is of special research interest, since it has undergone a dramatic change in the last 10 years. Using retail sales data, we build time series of market shares of prices of national brands and private labels for different dairy products and we study how prices of national brands react to private label growth. We find that, for most products, the negative impact of private label development on national brand prices is confirmed, and this may be mainly due to the difficulties in implementing product differentiation strategies by national brand manufacturers. A relevant exception is the hard discount channel, probably because its success is attracting an increasing number of national brands.

Keywords: Consumer/Household Economics; Marketing (search for similar items in EconPapers)
Pages: 12
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae98:10068

DOI: 10.22004/ag.econ.10068

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