Testing the decoy effect in thepresence of store brandsRicardo Sellers-Rubio and Juan-Luis Nicolau-GonzalbezDepartment of Marketing, University of Alicante, San Vicente, SpainAbstractPurpose–The purpose of this paper is to test decoy effect in the framework of sales promotion, byconducting several experiments to figure out how this decoy effect is influenced by the presence orabsence of a store brand.Design/methodology/approach–Several experiments have been conducted to test the validityof 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 namesand prices employed in the experiment are real.Findings–The results indicate that, as expected, the inclusion of a decoy in the choice setsignificantly increases the consumer’s relative preference for the promoted product; however, moreimportantly, the results also show that store brand consumers are more influenced by a decoy thannational brand consumers.Originality/value–This paper presents the first evidence of the decoy effect in the presence ofstore brands.KeywordsStore brands, Promotion, Consumers, Decoy, Framework of sales promotion,Relative preferencePaper typeResearch paper1. IntroductionIn recent years, store brands have gained big market shares in almost every country inwestern Europe and are widely offered by European mass retailers (Fallet al., 2013).For example, these brands represent about 40 percent of the total purchases in grocerystores in Spain (Nielsen, 2012). The rapid expansion of store brands has generated avast body of academic research (Burt and Davies, 2010; Hymanet al., 2010), and couldbe explained by the potential benefits they have for retailers. Among these benefits,Chenet al.(1999) highlight that store brands can be used to attract customers and makemore 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 theretailer increases sales of existing store brands, as there is a positive externality acrossstore brands that might be termed as“umbrella brand”effect. Their findings alsoprovide evidence that the retailer may want to design its store brand strategy to takeadvantage of linkages among products. Furthermore, Sudhir and Talukdar (2004) showthat consumers who buy more store brands in many categories are more profitable forthe store than consumers who buy relatively more national brands. Thus, selling morestore brands does not appear to increase consumers’price sensitivity or cause lowerrevenues or profits. Rather, it allows the store to differentiate itself relative to otherstores, thereby raising profits. Further, they allow a wide range of product options to beoffered to meet the differing needs and values of customer groups (Anselmsson andJohansson, 2007). Finally, Kremer and Viot (2012) show that store brands have apositive impact on the retailer image.