DP10877 Store Brands and the Role of Advertising

Author(s): Rachel Griffith, Michal Krol, Kate Smith
Publication Date: October 2015
Keyword(s): advertising, store brands
JEL(s): D21, D22, M37
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10877

Store brands are products over which a retailer (rather than a manufacturer) takes certain strategic decisions; we study the incentives of a retailer to advertise its store brands. We use detailed data on the British grocery market to document the considerable variation in store brand penetration across product categories and retailers. We develop a model that relates the pricing and advertising decisions of retailers and manufacturers to primitive characteristics of the category, and in particular the way that advertising affects consumer demand. We present empirical evidence that is consistent with several predictions from the model.