Effect of business cycle fluctuations on private-label share: what has marketing conduct got to do with it?

The authors investigate whether, and to what extent, marketing conduct varies over the business cycle, and how this contributes to the growing popularity of private labels. To address this, a unique dataset is examined that combines a broad set of seven marketing-mix instruments with private-label share, using data covering two decades for 106 consumer-packaged-goods categories in the U.S. The results show that private-label share behaves counter-cyclically, and that part of the boost in private-label share during contractions is permanent. Retailers’ observed practice of supporting their own labels in contractions while cutting back in expansion periods helps this cyclical sensitivity even further. Also national brands’ pro-cyclical behavior in terms of (i) major new-product introductions, (ii) advertising, and (iii) their promotional pressure relative to private labels, is associated with more pronounced cyclical fluctuations in private-label share, and even with permanent private-label market-share gains. While brand managers cannot be held responsible for the occurrence of economic downswings, they can be held accountable for how much contractions help strengthen their fiercest competitor, the store brands owned by their very customers.

Jaar van publicatie:2012

Toegankelijkheid:Closed