Pursuing the Value-Conscious Consumer: Store Brands versus National Brand Promotions

TLDR

The study examines whether value‑conscious consumers are equally drawn to national brand promotions and store brands, potentially heightening channel conflict. The authors identify psychographic and demographic traits and use a structural‑equation‑model framework to examine their association with store‑brand and national‑brand promotion usage. They find that demographics influence psychographic traits but not usage directly, and that store‑brand use is driven by economic motives while out‑of‑store promotions appeal to hedonic motives, yielding four distinct consumer segments that allow manufacturers and retailers to either avoid or compete with each other.

Abstract

The objective of this article is to determine whether national brand promotions and store brands attract the same value-conscious consumers, which would aggravate channel conflict between manufacturers and retailers. The authors identify psychographic and demographic traits that potentially drive usage of store brands and national brand promotions. They then develop a framework and structural equation model to study the association of these traits with store brand and national brand promotion usage. The authors find that though demographics do not influence these behaviors directly, they have significant associations with psychographic characteristics and therefore are useful for market targeting. Most important, usage of store brands and usage of promotions, particularly out-of-store promotions, are associated with different psychographics. Store brand use correlates mainly with traits related to economic benefits and costs, whereas the use of out-of-store promotions is associated mainly with traits related to hedonic benefits and costs. These differences result in four well-defined and identifiable consumer segments: deal-focused consumers, store brand–focused consumers, deal and store brand users (use-all), and nonusers of both store brands and deals (use-none). Therefore, manufacturers and retailers have the opportunity to either avoid each other or compete head to head, depending on which segment they target.