bao6.pdf - The current issue and full text archive of this journal is available on Emerald Insight at www.emeraldinsight.com\/0959-0552.htm Testing the

bao6.pdf - The current issue and full text archive of this...

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Testing the decoy effect in the presence of store brands Ricardo Sellers-Rubio and Juan-Luis Nicolau-Gonzalbez Department of Marketing, University of Alicante, San Vicente, Spain Abstract Purpose The purpose of this paper is to test decoy effect in the framework of sales promotion, by conducting several experiments to figure out how this decoy effect is influenced by the presence or absence of a store brand. Design/methodology/approach Several experiments have been conducted to test the validity of the decoy effect and rule out some explanations for the changes in demand that take place. The experiments consider three brands (two national brands and one store brand). All the brand names and prices employed in the experiment are real. Findings The results indicate that, as expected, the inclusion of a decoy in the choice set significantly increases the consumer s relative preference for the promoted product; however, more importantly, the results also show that store brand consumers are more influenced by a decoy than national brand consumers. Originality/value This paper presents the first evidence of the decoy effect in the presence of store brands. Keywords Store brands, Promotion, Consumers, Decoy, Framework of sales promotion, Relative preference Paper type Research paper 1. Introduction In recent years, store brands have gained big market shares in almost every country in western Europe and are widely offered by European mass retailers (Fall et al. , 2013). For example, these brands represent about 40 percent of the total purchases in grocery stores in Spain (Nielsen, 2012). The rapid expansion of store brands has generated a vast body of academic research (Burt and Davies, 2010; Hyman et al. , 2010), and could be explained by the potential benefits they have for retailers. Among these benefits, Chen et al. (1999) highlight that store brands can be used to attract customers and make more marketing profits from these attracted customers as well as from loyal customers. Further, Sayman and Raju (2004) show that adding a store brand to the shelves of the retailer increases sales of existing store brands, as there is a positive externality across store brands that might be termed as umbrella brand effect. Their findings also provide evidence that the retailer may want to design its store brand strategy to take advantage of linkages among products. Furthermore, Sudhir and Talukdar (2004) show that consumers who buy more store brands in many categories are more profitable for the store than consumers who buy relatively more national brands. Thus, selling more store brands does not appear to increase consumers price sensitivity or cause lower revenues or profits. Rather, it allows the store to differentiate itself relative to other stores, thereby raising profits. Further, they allow a wide range of product options to be offered to meet the differing needs and values of customer groups (Anselmsson and Johansson, 2007). Finally, Kremer and Viot (2012) show that store brands have a positive impact on the retailer image.
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