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This study addresses consumer switching between private labels and national brands. We empirically test the efficiency of product innovation, non-price promotions, and the price gap on two consumer-switching situations: recovering consumers that national brands lost to private labels and preventing consumers of national brands from migrating to private labels. We compare the effectiveness of these strategies using a Hazard model to simultaneously measure the effects on each consumer-switching situation. We find that the marketing strategies studied have different levels of effectiveness depending on whether the objective is to retain consumers or recover consumers lost to private labels. For example, reducing the price gap is a more effective strategy to prevent consumers from switching than to recover consumers from private labels. These results pose interesting managerial implications for both national brands and private labels.
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- To Retain or to Recover National Brand Consumers? Effects of Price, Promotion and Product Innovation Strategies
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