Will they return? Getting private label consumers to come back: Price, promotion, and new product effects

Promotions and adding products to the overall offer are more efficient than just price to win back consumers from private label, according to recent research published in the Journal of Retailing and Consumer Services.

Using a hazard model specification with two years of consumer panel data, this study simultaneously quantifies the effects of price gaps, non-monetary promotions, and new products on consumer switching from private labels back to manufacturer brands. The research focuses on the switching phenomena, rather than choice, such that time is a relevant variable. According to the results, non-monetary promotions and new products are more effective for recovering consumers than price gap reductions. These findings underscore the importance of understanding how consumers perceive the value of manufacturer brands.