The introduction and performance of store brands

The authors present an analytical framework for understanding what makes a product category more conductive for store brand introduction. They also investigate market characteristics that help explain differences in store brand market share across product categories. The present findings suggest that the introduction of a store brand is likely to increase retailer’s profits in a product categoey if the cross-price sensitivity among national brands is low and the cross-price sensitivity between the national brands and the store brand is high. The model predicts that the store brand share would also be greater under these conditions. In addition, the authors find that the introduction of a store brand is more likely to lead to an increase in category profits if the category consists of a large number of national brands-even though the store brand market share is expected to be lower when there are a large number of national brands. They compare the key predictions of our model with data on 426 grocery product categories. The data are consistent with the predictions of the model.