Price Di erentials among Brands in Retail Distribution: Product Quality and Service Quality

Juan A. Mañez, Rafael Moner Colonques, José Sempere-Monerris and Amparo Urbano
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Rafael Moner Colonques: Department of Economic Analysis and ERI-CES, University of Valencia, Spain

No 1602, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: A theoretical model is proposed to disentangle the contribution of brand qualityand retailer service quality in explaining brand price differentials across retailers. Two testablehypotheses emerge: i) for each brand type, price differences across retailers are independentof brand quality differentials, and ii) at a given retailer, price differences between different brand qualities are independent of service quality differentials. Our empirical analysis, for asample of UK grocery retailer prices, discloses that retailers that offer higher service qualitysell same quality brands at higher prices. In particular, service quality premia amount to 6%for national brands and are in the range of 9-15% for low-quality store brands. Besides, at agiven retailer, the price premia paid for the national brand are very large: around 150% betweennational brands and low-quality store brands, and around 40% between national brands and high-quality store brands. Also, the price differential between the national brand and thelow-quality store brand does not increase with service quality.

Keywords: Store Brands; Brand Quality; Service Quality (search for similar items in EconPapers)
JEL-codes: C70 J50 J52 L13 L20 (search for similar items in EconPapers)
Date: 2016-05
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http://repecsrv.uv.es/paper/RePEc/pdf/eec_1602.pdf First version, 2016 (application/pdf)

Related works:
Working Paper: Price differentials among brands in retail distribution: product quality and service quality (2011)
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