Why Private Labels' Performance Varies by Country


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Why private labels (PLs) enjoy a large market in some countries while hardly penetrating others? What makes a market favourable to PL-product development? Are there groups of countries that are differentiated by particular specificities in terms of PL presence? This study aims at addressing these relatively less-researched questions in international marketing literature. This paper overcomes this lack and offers insights into international market mechanisms by empirically investigating the factors behind these disparities, using a large, cross-country, time-series dataset and following an encompassing approach including a number of relevant economic, social and cultural determinants. In deriving the model, we assume that countries belong to a finite number of groups and that, in addition to the available variables, exist unobservable moderating factors that account for heterogeneity. By adopting a latent structure formulation, we allow for the creation of latent country segments in order to capture the potential heterogeneity among markets and outline their underlying determinants in terms of PL adoption. Our approach combines market structure, country segmentation and the sensitivity of potential factors in a unique framework.

, 22 pages

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G-2013-29.pdf (600 KB)