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Working Paper 18-2

Do Retailers Manipulate Prices to Favour Private Label over Brands? 

AUTHOR: Ratula Chakraborty

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.

CITATION: Chakraborty, R (2018) "Do Retailers Manipulate Prices to Favour Private Label over Brands?", CCP Working Paper 18-2

Working Paper 18-2

Policy Brief 18-2

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