Working Paper: CEPR ID: DP13283
Authors: Bart J. Bronnenberg; Jean-Pierre Dube; Robert Sanders
Abstract: 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.
Keywords: Private label; Consumer information; Brands and branding; Market structure
JEL Codes: L11; L15; M31; M37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Blind Taste Test (C99) | Private Label Share (J54) |
| Blind Taste Test (C99) | National Brand Preferences (M37) |
| Blind Taste Test (C99) | Consumer Preferences (D11) |
| Blind Taste Test (C99) | Decay of Information Effect (D83) |
| Decay of Information Effect (D83) | Purchasing Behavior Reversion (D11) |
| Blind Taste Test (C99) | Purchasing Behavior (D19) |
| Blind Taste Test (C99) | Long-term Effects on Purchasing Behavior (D12) |
| Blind Taste Test (C99) | Control for Confounding Factors (C90) |