Abstract
The large penetration of store brands has been accelerated by a substantial increase of their availability across various categories. Although store brands have generated tremendous interest in the literature, little work has been done on umbrella branding strategies for store brands. We extend the previous work of Erdem (1998) and Erdem et al. (2004) by studying the learning spillover effects of umbrella brands across categories for both national and store brands. We apply the Multivariate Multinomial Probit Model of cross-category learning across five product categories to study differences across store versus national umbrella brands in three countries (i.e., the United States, the United Kingdom, and Spain). Our results indicate that cross-category learning effects exist between different product categories in consumer packaged goods for both store brands and national umbrella brands, although some of the categories in which correlated learning happens differ between the two. The degree of cross-category learning also varies across categories.
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Notes
If a brand j n is not available in category m, all the terms related to category m would be zero.
When we estimated a version of this specification with a constant, the constant was small in magnitude and statistically insignificant in several cases, so we used this specification for no purchase.
In the covariance matrix for multivariate multinomial probit errors, we allow the utility error terms for the no-purchase options and umbrella brands to be correlated across categories and restrict other correlations (covariances) to be zero for tractability. We do not report these estimates in the results section, but these are available upon request from the authors.
To ensure comparability across countries, we used prices in the utility in the same monetary units (US$) by converting the prices in the United Kingdom and Spain into dollar prices using the mean of monthly exchange rates during the period of analysis. The exchange rates we used were 1.638 (1£ = US$1.638) for the United Kingdom and .006 (PTA1 = US$.006) for Spain.
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Erdem, T., Chang, S.R. A cross-category and cross-country analysis of umbrella branding for national and store brands. J. of the Acad. Mark. Sci. 40, 86–101 (2012). https://doi.org/10.1007/s11747-011-0288-8
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DOI: https://doi.org/10.1007/s11747-011-0288-8