Understanding Competition between Retailers and Manufacturers : An Integrated Analysis of Store Brand and National Brand Deal Usage

This paper jointly examines how consumers' perceptions drive their usage of store brands and deals for national brands. We find that both behaviors are influenced by economic as well as hedonic factors. Among hedonic factors, peer approval plays an important role in determining both behaviors. Among economic factors, the most important driver of store brand usage is perceived quality, and the most important driver of national brand deal usage is perceived savings. We also find a negative intrinsic relationship between store brand and national brand deal usage. Overall, our results suggest a competitive advantage for store brands. Store brands can attract many consumers by increasing their perceived quality. Manufacturers would then have a hard time attracting back these consumers even if they increase deal savings