What interests you about private-label products?
We know that doctors and pharmacists are much more likely to buy unbranded over-the-counter medicines, and chefs are much more likely to buy unbranded pantry staples. People “shop smart” in areas where they have expertise. This raises the question: If you give people objective product information, will they switch?
Stanford’s Bart Bronnenberg, Booth PhD candidate Robert Sanders, and I ran blind taste tests at several stores in the Mariano’s grocery chain, comparing branded and private-label ice cream, yogurt, and cookies. Before the tasting, only 44 percent of participants predicted they would choose the store brand. In the blind test, 72 percent picked the store brand, and 84 percent predicted they would purchase it next time they shopped.
We used loyalty cards to match each participant’s shopping behavior with her responses in the blind taste test. Shoppers’ actual purchases of the private labels increased by 16 percentage points during the week after the test, but the effect decayed quickly over time, falling to only 2 percentage points six months later.
Brands cost more. Why do people stick with them?
From other work, we know that branding works and can establish early-mover advantages for a company. The decay in the effect surprised us. Perhaps consumers are forgetting what they learned in the blind taste test. Or perhaps the ongoing marketing and advertising by national brands slowly overwhelms the information from the test.
Do you buy private-label products?
I assume you are referring to prepackaged foods. We do buy many branded food products, such as cereals and sodas. However, we buy Mariano’s fresh-squeezed orange juice and organic milk religiously. We also buy private-label over-the-counter pain medicines, along with basic baking essentials such as sugar and flour.
Jean-Pierre Dubé is Sigmund E. Edelstone Professor of Marketing at Chicago Booth.