Testing the Traditional View of National Brands and Store Brands: A Comparison of Response Elasticities and Intangible Brand Effects

By Sudhir Voleti, Raj Sethuraman
Journal of Marketing

Citation

Voleti, Sudhir., Sethuraman, Raj. Testing the Traditional View of National Brands and Store Brands: A Comparison of Response Elasticities and Intangible Brand Effects Journal of Marketing .

Journal of Marketing

Abstract

National brands in grocery products are traditionally viewed as higher-quality, higher-priced, image-oriented brands while store brands are viewed as lower-quality, lower-priced, value-oriented brands. This traditional view suggests that national brands are less own price elastic, more promotion elastic, and have higher intangible brand effect (brand equity) than store brands. This research tests this traditional view using a dataset comprising of 18 brands from five retail chains, 424 SKUs and 24,260 observations that account for over 90% of the Carbonated Soft Drinks category sales. The analysis permits us to explore brand, retailer, and subcategory differences related to the above expectations. Our results indicate that, on aggregate, there are no significant differences in response elasticities between national brands and store brands. This finding also holds for intangible brand effects. However, leading national brands in popular subcategories conform to a large extent to the traditional view of being less price elastic, more promotion elastic, and having higher intangible brand effects than store brands. Implications of these findings for managers and directions for future research are discussed.

Sudhir Voleti is an Associate Professor of Marketing at the Indian School of Business (ISB), where he is also a distinguished faculty member in Business Analytics. A renowned researcher in the fields of marketing research and business analytics, he has previously served as Associate Dean of Faculty Alignment and the Registrar's Office (FARO) at ISB.

Professor Voleti holds a PhD in Marketing and an MS in Applied Statistics from the University of Rochester, a PGDM from Indian Institute of Management (IIM) Calcutta, and a BE from the Birla Institute of Technology, Ranchi, along with years of industry experience.

Professor Voleti is recognised as one of India's leading data science academicians. His research focuses on combining data with econometric and statistical methods to explain phenomena of marketing interest such as evolution in the equity of brands across time, valuation of brands using secondary sales data, the sales impact of geographic and abstract distances between products and markets, and the performance, productivity, and benchmarking of salesforce organisations.

Professor Voleti has published numerous research articles in leading academic journals such as Management Science, Journal of Marketing, Journal of the Royal Statistical Society, the International Journal of Research in Marketing, and the Journal of Retailing, as well as book chapters and articles in the popular media. He also serves on the editorial review boards of numerous journals. Some of his significant works include "Impact of Reference Prices on Product Positioning and Profits", "The role of big data and predictive analytics in retailing", "Why the Dynamics of Competition Matter for Category Profitability", "A Bayesian non-parametric model of residual brand equity in hierarchical branding structures", and "An Approach to Improve the Predictive power of Choice - Based Conjoint Analysis".

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Sudhir Voleti