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Do Retailers Manipulate Prices to Favour Private Label over Brands?

Author

Listed:
  • Ratula Chakraborty

    (Centre for Competition Policy and Norwich Business School, University of East Anglia)

Abstract
Retailers act as both customers and competitors for brand manufacturers when selling private label in direct competition with brands. This paper considers whether retailers exploit this double-agent position to practice switch marketing, manipulating elements of the retail marketing mix to encourage shoppers to switch from buying brands to private label. Such manipulation can be blatant in nature, such as comparative advertising, brand delisting trials, copycat packaging, and biased shelf allocation. However, the key interest in this paper concerns whether retailers use a more subtle means through strategic pricing to favour private label over brands. The paper reveals very different price treatments of brands and matching private label goods. However, the identified pricing patterns are more indicative of retailers manipulating prices for the sake of segmenting consumers rather than displacing brands.

Suggested Citation

  • Ratula Chakraborty, 2018. "Do Retailers Manipulate Prices to Favour Private Label over Brands?," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2018-02, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    • Handle: RePEc:uea:ueaccp:2018_02
    as

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    File URL: https://ueaeco.github.io/working-papers/papers/ccp/CCP-18-02.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Sbonelo Gitt Ndlovu & Shalen Heeralal, 2022. "An investigation into marketing activities role on the purchase of private label brands:A systematic review of trends in literature," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 11(1), pages 33-41, January.
    2. Iván Valdés de la Fuente & Gonzalo Escobar Elexpuru, 2022. "Is it rational for a large-retailer to sell an own-brand product similar to the branded product of a large manufacturer? A Vertical Product Differentiation Model," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 90(3), pages 77-109, February.
    3. Bonnet, Céline & Bouamra-Mechemache, Zohra, 2019. ""Yogurt Cartel" of Private Label Providers in France: impact on prices and welfare," TSE Working Papers 19-1012, Toulouse School of Economics (TSE).
    4. Bonnet, Céline & Bouamra-Mechemache, Zohra, 2020. "Empirical methodology for the evaluation of collusive behaviour in vertically-related markets: An application to the “yogurt cartel” in France," International Review of Law and Economics, Elsevier, vol. 61(C).

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    More about this item

    Keywords

    brand; private label; retailer; pricing; marketing; manipulation;
    All these keywords.

    JEL classification:

    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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