Judith A. Garretson, Dan Fisher, and Scot Burton

Consumers interested in saving money at grocery retailers often attempt to do so by taking advantage of two different options. The first option is to purchase a national brand offered "on deal" (e.g., coupons, discounted prices). The second is to consider a private label brand, which is typically priced below non-price promoted national brands on an everyday basis. While consumers choosing either one of these options have a common goal of saving money, they have different attitudes and purchase behaviors regarding national brand promotions and private label brands. With the exception of one recent study (Ailawadi, Neslin, and Gedenk 2001), most previous studies have only separately investigated the characteristics of either deal prone shoppers (e.g., Blattberg and Neslin 1990) or private label prone shoppers (e.g., Richardson, Jain, and Dick 1996).

The similarities and differences between these two types of money-saving shoppers have received little attention. However, these customer segments play an important role in determining the balance of power between national brand manufacturers and retailers. One way retailers strategically use private labels is to decrease manufacturer power by diminishing the space available for national brands and forcing manufacturers to compete increasingly on price in order to win back lost market share. Of utmost importance for national brand manufacturers is finding a way to counter the private label incursion without eroding brand loyalty through excessive price promotions. By learning more about why consumers interested in saving money have different attitudes toward private labels and consumer promotions, manufacturers and retailers will enhance their skills in their contest to acquire value-conscious consumers. To serve this end, the purpose of this research is to propose and test a model that addresses the similarities and differences between consumers, promotion attitude and private label attitude and their relation to a measure of brand loyalty.

We test our model with a sample of 300 shoppers recruited from two stores belonging to the same grocery chain. These shoppers completed a self-administered questionnaire containing measures of private label and consumer promotion attitudes, brand loyalty, and other variables theorized to most significantly influence these attitudes. In addition to survey measures, respondents provided their scanner receipts containing all purchase information, including the total number of items and the number of private labels and promoted national brands purchased on their shopping trip.

As predicted by our model, we found both similarities and differences in variables that influence consumer promotion and private label attitudes. Consumers' level of value consciousness was positively related to attitudes toward both consumer promotions and store brands. However, the impact of price-quality associations and smart-shopper self-perceptions on consumer promotions and private label attitudes differed. For consumers believing price to be strongly associated with quality, the lower price of the store brands resulted in a more unfavorable attitude for private labels than for consumer promotions.

In addition to findings related to these price-perception variables, the ego-related dimension of smart shopper self-perception produced interesting results. Findings indicate that smart shopper self-perceptions are positively related to both consumers' promotion attitudes and private label attitudes. However, consistent with emerging literature (i.e., Chandon, Wansink, and Laurent 2000), these ego-related smart shopper feelings were more strongly related to promotion attitudes than to private label attitudes. Brand loyalty, on the other hand, was not impacted by value-consciousness, but was positively influenced by price-quality beliefs. Interestingly, brand loyalty was not related to consumers' attitudes toward promotions.

These findings carry implications for both manufacturers and retailers that compete for consumers interested in saving money. For retailers, we find that private label penetration may be improved by enhancing the perceptions of private label quality. Arguably, the everyday low price of store brands combined with the inference made by many consumers that price signals quality appears to lead to more unfavorable attitudes toward store brands. Various strategies, including in-store trial and improved package designs, may aid retailers in improving perceptions of private label quality that in turn may counter perceptions of lower quality inferred from the lower price of store brands.

Manufacturers appear to hold an advantage with those who consider themselves to be smart shoppers. The more pronounced positive effects of smart shopper perceptions on consumers' promotion attitude suggest that these consumers may feel more satisfaction from obtaining lower prices through searching and finding deals which deliver lower prices. Use of such consumer promotions may help reinforce perceptions of being smart shoppers. It appears that this ego-related dimension is not as strongly related to attitudes toward private labels, given that these store brands are available at low prices on an everyday basis. Manufacturers that use sales promotions to compete against private label brands may attempt to enhance such smart-shopper perceptions associated with finding and purchasing promoted products in the marketplace.