Two-Tier Store Brands: The Benefic Impact of a Value Brand on Perceptions of a Premium Brand

A recent trend in the retail industry is the emergence of multi-tier store brands. In the current article, we contrast consumers’ expectations in a retailing context in which a single store brand is present to one in which two store brands are offered in the same category. We propose that when a retailer offers a single store brand, consumers expect it to be of lower quality even when it is described as a premium brand. On the other hand, quality perception of a premium store brand increases in the presence of a value store brand. Importantly, quality perceptions of a value store brand are not affected by the presence of a premium store brand. In two studies we find support for our hypotheses showing the benefic impact of a value store brand on quality perceptions of a premium store brand.

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► We contrast expectations for one versus two store brands (SB) in the same category.
► When only a premium SB is carried, consumers expect it to be of lower quality.
► Quality perception of a premium SB increases in the presence of a value SB.
► Quality perceptions of a value SB are not affected by the presence of a premium SB.
► Results for price expectations replicate those for quality perception.