Consumer choice of store brands across store formats: A panel data analysis under crisis periods
Introduction
The strategic role of store brands (SBs) has been emphasised in prior European studies (Lamey et al., 2007, Martos-Partal and González-Benito, 2011) and especially in France (Ataman et al., 2007, Diallo et al., 2013). According to Nielsen Scan Track, store brand market shares increased in value from 22% in 2002 to 30% in 2012 in France. Some researchers attribute this growth to the economic crisis in the European context (Lamey et al., 2007). Other researchers showed that during this economic shock, consumers switched to store brands and decreased their consumption expenditures (Kaytaz and Gul, 2014). However, although prior studies emphasized the importance of store formats for consumers in different contexts (Martínez-Ruiz et al., 2010, Seock, 2009, Tripathi and Dave, 2013, Zielke, 2010), it is not clear how consumers make their choice of brands in different store formats during crisis periods. We use the term format to distinguish between supermarket and hypermarket retailers. Nevertheless, tough previous studies gave no indication about brand choice in different store formats in crisis, we can assume a migration phenomenon between formats to cope with the economic situation. Over the past years, smaller formats such as supermarkets have gained greater popularity in Europe as they allow time saving compared to bigger formats (i.e., hypermarket). However, loss in purchasing power is likely to bring back some consumers to hypermarkets where there are more deal opportunities and wider store brand ranges. In such a changing environment, the following questions appear to play a relevant role from a retailer and a manufacturer perspective:
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What key marketing and consumer factors influence store brand choice over national brands during economic slowdown and economic recession?
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Do these effects differ across store formats?
A better understanding of these issues can help to identify the appropriate marketing strategies for retail chains, thereby optimising retailer resources in turbulent times. It may also help national brand managers who face increased store brand competition when crisis hits. Previous research on store brand drivers focused on marketing mix variables (Ngobo, 2011a), store image (Diallo et al., 2013), retailer factors (Dhar and Hoch, 1997), consumer characteristics (Richardson et al., 1996), perceived risk (Liljander et al., 2009). These studies do not point out the moderating role of economic crisis, nor consumer store format adjustments to cope with difficult economic situation. Therefore, the aim of this research is to investigate the impact of marketing variables (e.g., price, quantity, and non-price promotion) and consumer characteristics (e.g., gender, age, and income) on store brand choice over national brands in times of crisis while taking into account different store formats. Thus, our research intends to understand consumer and retailer adjustments in times of crisis. By doing so, we complement previous studies on the relationship between business cycle and store brand purchase (Hoch and Banerji, 1993, Lamey et al., 2012).
This paper adds to the existing literature in the following ways. First, whereas prior research yielded important insights about store performance, to the best to our knowledge, the effects of the economic crisis on the relationships between marketing variables, consumer personal factors and store brand choice relative to national brands have not yet been examined. Our research contributes to understand how retailers should adapt specific marketing mix variables and how they should manage changes in socio-demographic variables when crisis hits. In this respect, it intends to complete more general recent studies analysing how marketing variables affect retail strategies in times of crisis (Hampson and McGoldrick, 2013, Kaytaz and Gul, 2014, Ferguson, 2014. Second, although prior research addressed the issue of store format in relation to consumer behaviour (e.g., Kumar and Karande, 2000, Zielke, 2010), it did not investigate store format adjustments in times of crisis. However, retailers need to understand quickly how to adapt their store format management strategies when economic crisis leads consumers to make changes in store frequentation. Therefore, we intend to clarify the role of store format in times of crisis by analysing two retail formats, in an attempt to extend and bolster recent previous studies on the subject (e.g., Kaswengi, 2013, Kumar and Roy, 2013).
The rest of the paper is structured as follows: first, we examine previous studies on store brands and present our research hypotheses. Second, we present the research methodology. Third, the results are analysed. Finally, the paper concludes with a discussion of the implications of the findings and suggests avenues for further research.
Section snippets
Research background
The central tenet of this research is that marketing elements, socio-demographics and times of crisis play a role in store brand choice over national brands. There are numerous studies that model the utility function of the consumer as a function of marketing variables (e.g. feature, display, …) and find that these actions affect utility and thus, brand choice (Balachander and Ghose, 2003). An example is Erdem et al. (2004) who examined consumer choice behaviour with regard to store brands in
Model specification
The deterministic component of latent utility of household h for format f on trip t is given by:where μh, f is the fixed component of utility, Xth, f βh represents the variable component of utility which is dependent on the composition of shopping basket for the specific trip and εth,f is the error term.
We use the binary logit model to study the impact of marketing variables and consumer characteristics on consumer choice of store brands. The binary logit model has been
Main effects and interaction
In this section, we analyse descriptive statistics on consumer behavior and promotion variables in the panel, before presenting the results of the logistic regression model for brand choice in times of crisis. Table 2 highlights three main trends during crisis periods: first the number products purchased decreases for both national and store brands. However, national brand products are overall more affected by crisis times than store brands which market shares remain stable for some product
Theoretical and managerial implications
The aim of this study was to understand how marketing variables and consumer characteristics affect consumer choice of store brands over national brands in two different retail formats in crisis periods. This research highlights three main theoretical contributions. First, it underlines the role of marketing policy variables and socio-demographic factors on store brand purchase over national brand in times of crisis. These results are in line with previous studies indicating the greater
Dr Mbaye Fall Diallo is an Assistant professor at University of Lille 2 (Institute of Retail Marketing and Management—IMMD) and a researcher at the LSMRC Lab (Univ Lille Nord de France-Skema Business School). He is member of scientific associations including Association for Consumer Research, Association for Education and Research in Commercial Distribution, European Marketing Academy and the French Association of Marketing (AFM). His research interests lie in the field of retail management,
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Dr Mbaye Fall Diallo is an Assistant professor at University of Lille 2 (Institute of Retail Marketing and Management—IMMD) and a researcher at the LSMRC Lab (Univ Lille Nord de France-Skema Business School). He is member of scientific associations including Association for Consumer Research, Association for Education and Research in Commercial Distribution, European Marketing Academy and the French Association of Marketing (AFM). His research interests lie in the field of retail management, store brands and quantitative data analysis (structural equation models and econometrics of panel data). His work has been published in journals such as European Business Review, Journal of Retailing and Consumer Services, International Business Research, International Journal of Retail and Distribution Management, Service Industries Journal, The Business Review, Revue Management & Avenir, Revue Française de Gestion, Recherche et Applications en Marketing, and in conferences proceedings such as INFORMS Marketing Science, European Association for Education and Research in Commercial Distribution, European Marketing Academy, International Conference of Marketing Trends, Academy of International Business, Association Française de Marketing Congress, etc. He is the author/co-author of two books and five book chapters on retail branding and management. Additionally, he has been a visiting scholar at University of Brasilia (Brazil) two times. He serves as a reviewer for several academic journals (International Journal of Retail & Distribution Management, Service Industries Journal, Journal of Consumer Behaviour, International Review of Retail, Distribution and Consumer Research, Economies et Sociétés, …) and scientific conferences (AMA, EMAC, EAERCD, AFM, Etienne THIL, …).
Dr Joseph Kaswengi is an Assistant professor at University of Orléans and member of VALLOREM Lab (University of Orléans and University of Tours). Email: [email protected]; Address: Vallorem, Rue de Blois BP 6739 45067 Orléans Cedex 2, France. He obtained his Ph.D. at University of Orléans (Vallorem). He is member of scientific associations such as the Gaston Berger Federation and the French Association of Marketing. His research lies in the areas of retail marketing, brand management and quantitative techniques applied to marketing, as well as revenue management. He has published in journals such as Revue Management et Avenir and presented papers in international and national conferences such as French Association of Marketing (AFM), International Symposium on National Brands and Private Labels, Méthodes Marketing, International Conference of Marketing Trends, etc. He is the author of a book on brand equity-point of sale relationship and a chapter on national-store brands. He is also involved in consulting.
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