The effect of consumer price consciousness on private label purchase

Abstract

Several reasons have been advanced to explain the remarkable success and growth of private label brands (PLBs) in Western Europe and North America. One important factor that has not been adequately highlighted is the role of consumer price consciousness and consequent consumer resistance to the prices of national brands. We develop a framework for understanding consumer price consciousness, why it varies across product categories, and how it may result in PLB purchase, and calibrate the model on category-level field data. Our findings establish that perceived category risk and perceived price unfairness of national brands in that category are significant antecedents of consumer price consciousness, and that variations in such price consciousness across categories is a significant reason why consumers buy PLBs more in some categories than in others. Additionally, we show that perceived price–quality association has a significant effect on private label purchase in risky categories.