Private label buying behaviour

Ellis, Katrina (1989) Private label buying behaviour. Doctoral thesis, University of London: London Business School.

Abstract

This is an empirical study of how people buy private labels as compared with traditional branded goods in the UK packaged grocery market. The emphasis is very much on describing buying patterns rather than attempting to explain why they occur. Private labels are lines which are exclusive to a particular retailer. An empirically derived theory of buyer behaviour is drawn upon. Two stochastic models, the Negative Binomial Distribution (NBD) and Dirichlet models describe buying behaviour and provide norms against which private label buying patterns are compared. Panel data for five product fields and two regions are analysed. Private label buying patterns are compared with those for brands, and with theoretical predictions. Various measures of buyer behaviour are calkulated; the numbers buying and the rate at which they buy; then how people buy from one time period to another; then the distribution of light and heavy buyers across the population; and finally we examine how people spread their purchases across the product field. Together, these measures provide a detailed picture of sales, and enable us to focus on issues such as private label proneness. The analyses consists of four parts. First, we explore regularities of private label buying behaviour. However, before we can interpret the results, we have to explain a consistent deviation from the model which occurs because private labels suffer from limited availability in comparison to the average brand. This is accounted for by examining purchasing at the within store-chain level where brand and private label buying patterns are compared. Finally, private label proneness is explored by examining how people buy across two product fields. Though there are many differences between brands and private labels, on the whole they are bought in much the same way. There are some interesting differences; private labels achieve higher within-store market shares than the average brand and are successful in this respect there is a tendency for people having bought private labels in one product field, to be slightly more inclined to then buy them in another. Thus an indication of proneness to private labels generally rather than to specific store's private labels.