For a company with major brands, some with premium prices that are justified through decades of effective marketing promotion, having lower-cost alternatives available in an established market poses considerable potential risk. It is estimated that private labels are generally, on average, priced at a rate 21 percent less than comparable major brands (Batra and Indrajit 2000). Hence, marketing experts could be correct that this dual-producing strategy could be detrimental to achieving sales success for major brands. In an environment where the post-recession consumer is scaling back premium-priced purchases in favour of frugality, consumers might flock to the private label brands and consume less of the firm’s major brands. Whilst the firm would theoretically achieve greater sales of its private label products, the higher-priced name brand products would provide much greater revenues if the sale of the major brands outpaced private label sales.Does it make logical sense for a company to compete with itself by providing private label and major branded products? Hoch and Banerji (1993) appear to think so, believing that customers measure perceived high quality in greater proportion to price when making the decision to select private label or major brands. Private label products must adhere to quality assurance systems and government-imposed regulations (especially in terms of food-related safety), therefore these private label products are comparable to major brand product quality. Private label brands, today, are articulated in such a fashion to give consumers a quality-oriented brand proposition which serves as a predictor for future repurchases of the private label products. Steenkamp, van Heerde and Geyskens (2010) assert that many of today’s private label brands are being promoted at the higher stratum of total product quality.However, De Wulf, Odekerken-Schroder, Goedertier and Van Ossel (2005) conducted an empirical study and found that the majority of consumers believed that name brands were of higher quality than private label products. However, in this same study, it was discovered that private label quality was judged higher than comparable name brands in blind taste testing experiments (De Wulf, et al. Therefore, perceived quality from a social perspective would seem to favour the name brand over that of the private label. However, since consumers favoured the
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