The rise of the private labels How price and promotion of private labels and national brands vary under different economic circumstances

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The rise of the private labels

How price and promotion of private labels and national brands

vary under different economic circumstances

Master thesis Marketing Intelligence University of Groningen Faculty of Economics Business

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Aukeline Wind – The rise of the private labels | 2

ABSTRACT

Since the last global recession consumers have become more value conscious, which made them reevaluate their purchase priorities. Simultaneously, companies make changes in their marketing mix. Since marketing budgets are suppressed during contractions, managers have to know what the effectiveness of the different marketing instruments across the business cycle is. However, the effectiveness of the marketing instruments on private labels is still not examined, which is remarkable since their growing market shares and high margins. Therefore, this study investigated whether and to what extent the marketing instruments are affected by the business cycle and how they relate to national brands. Using weekly data from 1994 till 1998, price and promotion elasticities of 52 private labels and 114 national brands across 39 CPG categories are estimated. It is found that price and promotion elasticities decrease during contractions, except the combination of feature and display. Furthermore, consumers are likely to switch to private labels during contractions and once experienced the private labels, they are more loyal to private labels in expansions than before.

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INTRODUCTION

Since the last global recession consumers have become more value conscious (Nielsen, 2011), which made them reevaluate their purchase priorities. This has resulted in the elimination of purchases in less essential categories and searching substitutes for the essential ones (Quelch & Jocz, 2009). Therefore, they may switch to cheaper alternatives such as private labels. According to Nielsen (2005; 2011), there is indeed an increase in private label shares. Whereas the European average of private label share in CPG was 23 percent in 2005, it rose to an average of 35 percent in 2011. However, there are still considerable differences between countries. Exemplary differences are those of Switzerland (with the highest private label share of 46 percent) and Germany (32 percent) on the one hand, and Greece (12 percent), on the other hand (Nielsen, 2011).

Overall, this growth implies that private labels have become more important leading to an increasing pressure on national brands to promote. This directly leads to lower margins and therefore to lower revenues, while it also indirectly devaluates the brand as a whole (Hulsebos, 2012; Jedidi, Mela, & Gupta, 1999). From a recent study of Hulsebos (2012) it appeared that consumers who experienced the comparable quality of private labels, will only buy national brands when it is in a promotion. Therefore, promotions have only short-term effects. However, when you do not promote your products your competitors will promote theirs, and thereby possibly stealing some of your customers (Hulsebos, 2012).

And not only customers have experienced the benefits of the private labels, retailers have experienced them as well. It is already known that private labels provide retailers with intrinsic advantages (Berger, 2011), such as higher margins (Ailawadi & Harlam, 2004): 35 instead of 25 percent (Berger, 2011). Therefore, private label might be more beneficial for a retailer than a national brand. Furthermore, private labels are getting more square meters in a supermarket (Gfk, 2014): 30 percent of total shelves in 2013 compared to only 17 percent in 2003 (Jedidi et al., 1999; Kooistra & Reijn, 2014) and broader assortments. For instance, Albert Heijn started with the ‘Euroshopper’, while they have nowadays a full range of private labels, from AH Basic to AH Excellent. Together, these recent developments contribute to the fact that private labels become important competitors (Lamey, Deleersnyder, Steenkamp, & Dekimpe, 2012). Therefore, it is interesting for both retailers and academics to learn more about private label dynamics.

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Aukeline Wind – The rise of the private labels | 5 advertising (Deleersnyder, Dekimpe, Steenkamp, & Leeflang, 2009) and innovation (Axarloglou, 2003) behave procyclical. This implies that advertising expenditures and innovations are raised during economic expansions, while they are diminished during contractions. On the other hand, price behaves countercyclical in that national brands increase prices due to falling sales volumes (Steenkamp, Van Heerde, & Geyskens, 2010).

Existing literature shows that the elasticity patterns are not symmetric across contractions and expansions (Lamey, Deleersnyder, Dekimpe, & Steenkamp, 2007; Van Heerde et al., 2013). For instance, Van Heerde et al. (2013) showed that the premium mass brands, value mass brands, premium niche brands, and value niche brands had different patterns over time. Furthermore, the short-term effects did not react on changes in the business cycle, while the long-term effects did. Although the effectiveness of price and advertising of national brands have been investigated, the effectiveness of marketing instruments on private labels is still not clearly examined. This is remarkable since their growing market shares (Nielsen, 2005; Nielsen, 2011) and high margins will lead to increasing profits during economic downturns. The success of PLs is asymmetric as well, because private labels did not only grow during contractions. Private labels stayed on a higher level after the contraction compared to before (Lamey et al., 2007).

Therefore, this paper will investigate how the effectiveness of private labels’ price and promotions change over time, leading to the following research question: What is the (difference in) effectiveness of marketing instruments on the performance of private labels compared to national brands under different economic circumstances?

The remainder of this article is organized as follows: firstly, existing literature is reviewed. Then a framework for understanding the effectiveness of marketing instruments is developed. Followed by the methodology and data. After which the data will be analyzed and interpreted. The paper will conclude with a discussion, implications and suggestions for further research.

THEORETICAL FRAMEWORK

Business cycle

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Aukeline Wind – The rise of the private labels | 6 CPG is based on habits (Hoyer, 1984), consumers spend little cognitive effort in their purchases during expansions (Lamey et al., 2012). However, in economic downturns they are confronted with more uncertainty and limited budgets, consequently making them more price sensitive (Estelami, Lehmann, & Holden, 2001; Sethuraman, Tellis, & Briesch, 2011), and thus, they will pay more attention to purchase decisions. Reevaluation of their purchase priorities results in eliminating purchases in less essential categories and searching substitutes for essential ones such as daily groceries (Kamakura & Yuxing Du, 2012; Quelch & Jocz, 2009). Therefore, they are more inclined to choose a cheaper alternative – the private labels (Hampson & McGoldrick, 2013).

Conversely, national brand dynamics are rather procyclical – they move in the same direction as the economy. However, the extent of both dynamics is asymmetric (Lamey et al., 2007) since private label share during contractions increases more than the share of national brands during expansions. Thus, there is an upward trend regarding private label share which might be explained as an effect of the business cycle, as mentioned before. However, it might also be explained by consumer learning (Szymanowski & Gijsbrechts, 2012). As noted by Nielsen (2011), customers perceive the quality of private labels as good as the quality of national brands (29 percent), while other customers experience an even higher quality (35 percent) which can be interpreted as consumer learning. These positive product experiences in times of economic downturn may lead to higher customer loyalty in expansions, suggesting that buying private labels may become their new habit (Lamey et al., 2012).

Marketing mechanisms: Price

Price is one of the most important marketing instruments (Van Heerde et al., 2013). Based on an early research of Tellis (1988), Bijmolt, Van Heerde and Pieters (2005) conducted a new meta-analysis covering 1851 elasticities. They found that people have become more price sensitive over time since the average price elasticity has risen from -1.76 (Tellis, 1988) to -2.62. This is consistent with Van Heerde et al. (2013), who found that consumers’ short-term price elasticity has grown across their observation period of 18 years. Evidence also shows that price sensitivity is relatively countercyclical in nature (Chevalier & Scharfstein, 1996; Gordon, Goldfarb, & Yang, 2013; Van Heerde et al., 2013). However, this varies per category. The variation may be explained by the importance of the category in the consumers’ share of wallet (Gordon et al., 2013). Furthermore, short-term elasticities do not change with the business cycle, while long-term elasticities do (Van Heerde et al., 2013).

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Aukeline Wind – The rise of the private labels | 7 25%-30% lower than prices of national brands (Kumar & Steenkamp, 2006) while having equal quality (Berger, 2011; Nielsen, 2011). Therefore, I predict that the price elasticity of private labels is lower than that of national brands. This leads to the following hypotheses:

H1a: Price elasticity of private labels will behave countercyclical.

H1b: Price elasticity of national brands will behave countercyclical.

H1c: Price elasticity will be smaller for private labels than for national brands.

Marketing mechanisms: Promotions

According to Lamey et al. (2012) promotion is mostly influenced by the business cycle, compared to the other marketing instruments. Promotional activities – such as temporary price reductions, features and displays – are used to increase customer response (Bell, Chiang, & Padmanabhan, 1999), leading to higher short-term sales. However, there are hardly any long-term effects (Nijs, Dekimpe, Steenkamp, & Hanssens, 2001; Pauwels, Hanssens, & Siddarth, 2002). There are several reasons for this short-term increase, such as impulse buying (Liao, Shen, & Chu, 2009), brand switching (Gupta, 1988) and stockpiling (Ailawadi, Gedenk, Lutzky, & Neslin, 2007).

Three frequently mentioned promotion mechanisms are: temporary price reductions (TPRs), features, and displays, which all behave procyclical in case of national brands relative to their private label counterparts (Lamey et al., 2012). This implies that the relative promotion pressure of national brands increases in expansions, while the opposite is true for contractions. This can be explained by retailers and manufacturers bottom line. In expansions, there is little pressure on the bottom line suggesting more promotion expenditures (Lamey et al., 2012). Conversely, there is more pressure during contractions, resulting in lower expenditures for promotion activities (Graham & Frankenberger, 2011).

Temporary price reductions

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Aukeline Wind – The rise of the private labels | 8 In addition, I expect that the effects for national brands are higher since private labels are offering lower prices than national brands all the time. This is consistent with the findings of Lamey et al. (2012) who found that the effect of private labels’ TPR are not cyclical at all, whereas TPR of their counterparts are. This leads to the following hypotheses:

H2a: The effect of TPRs on private labels will behave countercyclical.

H2b: The effect of TPRs on national brands will behave countercyclical.

H2c: The effect of TPRs on private labels will be smaller than the effect for national brands in

both contractions and expansions.

Feature

Feature refers to ‘the retailer advertising the brand at a specific price in a weekly store circular’ (Narasimhan et al., 1996). Feature is seen as a type of advertising in this definition. Recently, Sethuraman et al. (2011) found an average short-term advertising elasticity of .12 and an average long-term advertising elasticity of .24. Both advertising elasticities were lower than the found elasticities covered by Assmus, Farley and Lehmann (1984) suggesting that advertising elasticities decline over time. However, advertising is not commonly used by private labels and mostly generic instead of product specific (Kumar & Steenkamp, 2006). Although advertising is not commonly used, advertising in the form of features are used by private labels to increase sales as will be discussed below.

Display

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Aukeline Wind – The rise of the private labels | 9 On the other hand, the consideration set formation effect suggests that displays and features increase the probability of brand choice by being in the consideration set (Allenby & Ginter, 1995; Zhang, 2006). Brand choice might also be influenced by the extent to which alternatives can be compared and checked. Whereas displays can help to compare competing products, they may also manipulate the comparison when putting only one product in the end-of-aisle display. The latter may also hold for features (Lemon & Nowlis, 2002). Therefore, the probability to choose these products becomes larger. However, consumers that put more cognitive effort in evaluating information of price and promotion are less affected by features and displays than TPRs. This implies that this is only the case for consumers using low cognitive efforts. Since consumers spend more cognitive effort in their purchases during contractions (Lamey et al., 2012), it can be expected that the effects of both displays and features are smaller during contractions. Furthermore, I expect that the effect of both display and feature will be smaller for private labels compared with the effect of national brands. Therefore, this leads to the following hypotheses

H3a: The effect of features on private labels will behave procyclical.

H3b: The effect of features on national brands will behave proyclical.

H3c: The effect of features on private labels will be smaller than the effect for national brands

in both contractions and expansions.

H4a: Private label displays will behave procyclical.

H4b: Private label displays will behave procyclical.

H4c: The effect of displays on private labels will be smaller than the effect for national brands

in both contractions and expansions.

METHODOLOGY

Data

IRI data was used to study the influence of the business cycle on the effectiveness of marketing instruments. Weekly volume sales of 57 CPG types in the total Dutch market were selected over a period of week 29, 1994 through week 28, 1998. In each category, private labels together with three national brands were selected based on their order sales. It should be noted that ‘Euroshopper’ was included as a private label, since it is a private label of the Albert Heijn. However, it was treated as a separate brand in the initial data. In total, 171 national brands and90 private labels were included in this study. Table 1 provides an overview of the product types combined in overarching product categories.

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Aukeline Wind – The rise of the private labels | 10 the fluctuations in these aggregate output, employment and inflation that have consequences for customers well-being are an essential part of business cycles (Stock & Watson, 1988).

Product categories Examples product types Number of

product types

Animal Animal food 1

Bakery and candy Candybars, Chewing gum, Cookies,

Sugar

11

Beverages Coffee, tea, softdrinks 7

Dairy products Fresh liquid milk, yoghurt 7

Grain Cornflakes, rice 4

Household care Detergent, toilet paper 4

Other food Frites, prepared meals, sauces, soup, 12

Personal care Shampoo, toothpaste 8

Vegetable and animal oils Olive oil, sunflower-seed oil 3

Table 1: Data coverage

Business cycle

The business cycle should be defined in order to evaluate its impact on the effectiveness of marketing instruments over time. For this reason, I transformed quarterly GDP data using time-series filters which focus on frequencies in the data. Whereas low frequencies are longer cyclical periods, high frequencies are shorter periods such as monthly or weekly data. Therefore, several time-series filters can be used, such as Hodrick-Prescott filter (Hodrick & Prescott, 1997) and Baxter and King (Baxter & King, 1999) filter. However, the Christiano-Fitzgerald random walk filter (Christiano & Fitzgerald, 2003) uses the entire time series in contrast to the BK filter which will drop several observations (Van Heerde et al., 2013). In addition, CF can use more disaggregated data (e.g. monthly or quarterly data), whereas the HP filter only uses low frequency data (Christiano & Fitzgerald, 2003; Lamey et al., 2007). Due to these advantages, I have used the Christiano-Fitzgerald random walk filter.

First, the CF filter was applied to log-transformed quarterly GDP data of the Netherlands during 1994 till 1998. Subsequently, linear interpolation was used to transform the results to weekly data leading to a cycle represented in figure 1. Following Lamey, et al. (2007; 2012) and Van Heerde, et al. (2013), periods showing a decrease – e.g. lgdpt-1 > lgdpt – were treated as contractions, while periods with an

increase – e.g. lgdpt-1 < lgdpt – were treated as expansions. In total, the period had 153 weeks that

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Aukeline Wind – The rise of the private labels | 11 In order to evaluate the effectiveness of marketing instruments on sales over the business cycle, the following equation was used:

Table p lnStcb = β0cb + β1cb lnPt + β2cb lnTPRt +β3cb lnDt + β4cb lnFt + β5cb lnDFt + εt

where S is the volume sales during week t (t = 1 … T). P was the average price per volume in week t, whereas TPR was the temporary time reduction at time t. D was the category weighted sales in stores where a product is displayed only at time t; F was the category weighted sales in stores where a product was featured only at time t; and DF is the category weighted sales in stores where a product is both displayed and featured at time t. ε was the unobserved error term.

Subsequently, this model was extended by interaction effects. It will be investigated whether the business cycle moderates the effectiveness of marketing instruments on volume sales. Therefore, contraction as well as expansion were included:

(2) St = β0 + β1 Expt + β2 Contt + β3 lnPt + β4 lnPt Expt + β5 lnPt Contt + β6 lnTPRt + β7 lnTPRt Expt +

β8 lnTPRt Contt + β9 lnDt + β10 lnDt Expt + β11 lnDt Contt + β12 lnFt + β13 lnFt Expt + β14 lnFt Contt

β15 lnFDt + β16 lnFDt Expt + β17 lnFDt Contt + εt

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RESULTS

Overall descriptive findings

Since I focused on the differences between private labels and national brands, I only included those product types that had some results on ‘Private Label’, including ‘Euroshopper’, and on ‘National Brand’. In total, 39 categories were included, e.g. 25 private labels, 27 Euroshopper and 114 national brands. Furthermore, I have focused on overall, aggregated results which means that the brand-specific parameters were combined using the method of added Z’s (Rosenthal, 1978). Combining those parameters increased the statistical power of the results and therefore leads to more generalizable insights.

Table 2 gives an overview of the dynamics of volume sales across the business cycle for both private labels and national brands. These data were obtained using the sales indices of the brands included in this study. These indices show whether the brand sells more or less than its mean during a particular week. Then, all mean indices were summed and divided by the number of brands. This gives us the mean sales index of either private labels, and total. As can be seen, private labels sell below average during expansions (-1.84%). In contractions, it is seen that total sales have declined. However, private labels were selling more than average (+5.09%) suggesting a growth in private label share (+7.06%). This is in accordance with the findings of Lamey et al. (2012), who found on average an annual private-label growth rate of 5.39% during contractions and a total annual growth rate of 7.65%.

Expansion Contraction % change

Private label .9816 1.0509 +7.063%

Total 1.0395 1.0046 -3.350%

Table 2: Sales dynamics

Main effects

Table 3 summarizes the (moderator) effects of the business cycle on the marketing instruments as stated in equation 2. First, the main effects will be discussed. Subsequently, the moderating effect of the business cycle will be discussed.

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Aukeline Wind – The rise of the private labels | 13 al., 2001) making them more likely to buy national brand. On the other hand, a growing economy increases the purchases of nonessential products, such as food away from home and jewelry (Kamakura & Yuxing Du, 2012).

Furthermore, contraction was only significant for national brands (β = .0587, p<.01). The effect of a contraction on national brands was much lower than the effect of an expansion. This implies that customers are inclined to buy less national brands during contractions due to, for instance, more uncertainty and limited budgets.

Moderating effects

The interaction between price and expansion of private labels is negative (β = -.0347, p<.05). However, it becomes positive during contractions (β = .0131, p<.05) implying that consumers, with regard to private labels, are more price sensitive during expansions than during contractions, e.g. countercyclical.. A similar pattern is seen by national brands, although the effect is still negative during contractions (β = -.1311, p<.01 and β = -.0538, p<.01 respectively).

Promotion elasticities differ across the business cycle. All private label promotion elasticities show procyclical behavior patterns, e.g. TPR (β = .1284, p<.01; β = -.0094, p<.01), display (β = .3483, p<.01; β = .0800, p<.01), feature/display (β = .1031, p<.05; β = -.0476, p<.10) and feature (β = .0426, p>.05; β = .0425, p>.05) though the latter is not significant. National brand promotion elasticities are procyclical as well, e.g. TPR (β = .1322, p<.01; β = .0590, p<.01), display (β = .1779, p<.01; β = .1348, p<.01) and feature (β = .0517, p<.01; β = .0340, p<.01), except for the combination of feature and display (β = .1472, p<.01; β = .1494, p<.01). Although feature is not significant. This procyclical behavior implies that customers are less responsive to promotion instruments, and vice versa.

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Private label National brand

Variable Weighted β Z p-value Weighted β Z p-value

Intercept 7.7583** 19.4042 .0000 9.3126** 34.1532 .0000 Price -.4314** -5.3460 .0000 -.4617** -16.7246 .0000 TPR .0137* 1.7027 .0446 .0357** 8.6635 .0000 Display .0500** 5.0707 .0000 .0678** 7.8284 .0000 Feature .0312* 2.2540 .0122 .0409** 6.2741 .0000 FD .0788** 4.8636 .0000 .0584* 1.9984 .0228 Expansion -.0414* -1.6580 .0485 .2304** 2.8681 .0021 Contraction -.0242 -1.6340 .0516 .0587** 12.6349 .0000 Price*Exp -.0347* -2.1124 .0174 -.1311** -7.1874 .0000 Price*Cont .0131* 1.8614 .0314 -.0538** -10.0499 .0000 TPR*Exp .1284** 4.8733 .0000 .1322** 5.8541 .0000 TPR*Cont -.0094** -3.9345 .0000 .0590** 7.7281 .0000 Display*Exp .3483** 6.5439 .0000 .1779** 8.6550 .0000 Display*Cont .0800** 2.6888 .0036 .1348** 6.2183 .0000 Feature*exp .0426 1.5440 .0618 .0517** 2.8588 .0021 Feature*cont .0425 .7542 .7734 .0340 1.4492 .9265 FD*exp .1032** 7.9014 .0000 .1472** 11.2720 .0000 FD*cont .0476 1.5109 .0655 .1494** 5.6279 .0000

*p < .05 Table 3: parameter estimates extended model **p < .01

Variable Expansion Contraction

Price 1.273 1.234

TPR 1.183 23.750

Display 0.618 1.562

Feature 1.257* 1.014*

FD 1.132 1.651

*not significant Table 4: Marketing pressure of national brands relative to private labels

DISCUSSION

Theoretical implications

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Aukeline Wind – The rise of the private labels | 15 countercyclical nature as can be seen in figure 2. Since consumer decision-making is primarily influenced by prices (Hampson & McGoldrick, 2013) and consumers have lower disposable incomes during contractions, they will emphasize prices in that they are more price consciousness (Estelami et al., 2001; Sethuraman et al., 2011). To keep risks to a minimum customers will limit and delay purchases, waste less, bargain for lower prices (Ang, 2001) and make less impulse purchases (Hampson & McGoldrick, 2013). Since prices of national brands are 25%-30% higher than prices of private labels (Kumar & Steenkamp, 2006) while having equivalent quality (Berger, 2011; Nielsen, 2011), customers are more inclined to buy private labels during recessions (see table 2). This suggests that price changes of national brands are less effective during recessions suggesting a procyclical pattern. From a similar point of view, price changes of private labels could be less effective during contractions, because customers have already switched to private labels. Further research should investigate this (switching) behavior.

Figure 2: Effect of business cycle on price elasticities

Second, the effect of TPRs was stronger during expansions than during contractions for both private labels and national brands suggesting that TPR of both behaves procyclical (figure 3). Thus, a customer will react more heavily on a price reduction during expansions than during contractions which confirms with earlier findings of (Lamey et al., 2012).

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Aukeline Wind – The rise of the private labels | 16 et al. (2012), who observed an increased intensity during the good times. A possible explanation for these results is that consumers are more likely to switch to private labels during contractions. To keep sale reductions as small as possible, national brands can use temporary price cuts to compete with their counterparts and attract price conscious customers as well. Since this is the opposite of what previous research on national brands suggested (Steenkamp et al., 2010), further research is needed to give a more thorough investigation.

Figure 3: Effect of business cycle on TPR elasticities

Conversely to prior research (Lamey et al., 2012), but in line with expectations, display behaves procyclical (figure 4). Feature shows a similar pattern in the extended model as well (figure 5). However, the effects of features are not significant meaning that no difference is observed in the available data. Focusing on displays, it can be observed that this promotional instrument is the only one which is higher for private labels during expansions.

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Aukeline Wind – The rise of the private labels | 17 Figure 4: Effect of business cycle on display elasticities

Figure 5: Effect of business cycle on feature elasticities

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Aukeline Wind – The rise of the private labels | 18 Figure 6: Effect of business cycle on display & feature elasticities

Managerial implications

The results show that consumers react differently across the business cycle which results, according to Lamey et al. (2007), in a lasting higher market share of private labels. Since fluctuations of this business cycle are beyond the control of managers of private labels and national brands, both need to adapt their marketing strategy under these changing economic circumstances. In recessions, consumers are pressed by growing uncertainty and reduced budgets, making consumers more likely to switch to the lower-priced private labels. Therefore, national brands need to adapt a strategy that compensates for their initial losses. Although price is less effective during contractions, its effect is still strong (-.516).. And since consumers are more price conscious and are looking for lower prices, they should allocate a larger part of their budgets towards price reductions. But this is not without caveats, because price promotions will harm national brands in the long run by making consumers more price sensitive (Mela, Gupta, & Lehmann, 1997) and reducing their willingness to pay a price premium (Steenkamp et al., 2010). Although this may seem somewhat contradicting, we recommend to increase price cuts intensity during contractions since this will reduce consumers’ switching behavior. As noted by Sethuraman (1995), these price reductions diminish sales of private labels. However, we also emphasize that this intensity should not be increased continuously across the business cycle.

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Aukeline Wind – The rise of the private labels | 19 addition, the results show that displays are an important promotion instrument. Thus, using more displays during expansions will increase their volume sales. Especially when they interpret these displays as a proxy for a price cut, i.e. the price-cut effect (Inman et al., 1990; Zhang, 2006).

Limitations and suggestions for further research

Besides the already mentioned suggestions for further research, this study has some limitations that offer opportunities as well. First, this study is based on data from the period 1994 till 1998, ten years before the worldwide recession of 2008. Since then, private labels have grown rapidly and the world economy is currently in one of the greatest recession of all times. Therefore effects might currently be stronger and differences between private labels and national brands might be larger. Further research should replicate these findings using more recent data.

Furthermore, the results possibly depend on a long expansions and a short, moderate contraction. Further research should account for the strength of expansion and contraction.

Finally, an aggregated model over daily consumer goods was estimated. The results could differ within categories and between individual brands as well. In addition, also durables could give different results since these products might be deferred/delayed until the recession is over. These issues request further investigation.

In summary, this study examines how the effectiveness of marketing instruments, i.e. price and promotions, on volume sales differ between private labels compared to national brands under different economic circumstances. We found stronger effects for all instruments of national brands in both expansion and contraction, except for displays during expansions. More insights were given about the cyclical behavior patterns. Whereas most promotional instruments behave procyclical, price behaves rather countercyclical. We hope this study is useful for managers and that it inspires other researchers.

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The rise of the private labels How price and promotion of private labels and national brands vary under different economic circumstances