Consumer Misinformation and the Brand Premium: A Private Label Blind Taste Test / Bart Bronnenberg, Jean-Pierre H. Dubé, Robert E. Sanders.

Format:

Book

Author/Creator:

Bronnenberg, Bart.

Contributor:

National Bureau of Economic Research.

Dubé, Jean-Pierre H.

Sanders, Robert E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25214.

NBER working paper series no. w25214

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Consumer Misinformation and the Brand Premium

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

We run in-store blind taste tests with a retailer's private label food brands and the leading national brand counterparts in three large CPG categories. In a survey administered during the taste test, subjects self-report very high expectations about the quality of the private labels relative to national brands. However, they predict a relatively low probability of choosing them in a blind taste test. Surprisingly however, an overwhelming majority systematically chooses the private label in the blinded test. During the week after the intervention, the tested private label product market shares increase by 15 share points, on top of a base share of 8 share points. However, the effect diminishes to 8 share points during the second to fourth week after the test and to 2 share points during the second to fifth month after the test. Using a structural model of demand, we show these effects survive controls for point-of-purchase prices, purchase incidence, and the feedback effects of brand loyalty. We also find that the intervention increases the preference for the private label brands, and that it decreases the preference for the national brands, relative to the outside good. The findings are consistent with a treatment effect of information on demand where the memory for this information decays slowly over time. Alternative explanations to the information treatment are ruled out.

Notes:

Print version record

November 2018.