Taking the label out of private label: An investigation if the private label brand affects the consumers’ willingness to pay

Abstract

Private labels have skyrocketed during the last decades. The main goal is to increase the retailers’ margins. A recent trend is the introduction of several tiers of private labels, and especially the premium private label segment. The recent academic focus has been on measuring quality and price aspects of private labels. The purpose of this article is to investigate if the private label brand affects the consumers’ willingness to pay by testing it through two surveys, with brand versus without brand. Therefore, this article combines measurements of willingness to pay and applies them on a premium private label brand within the FMCG sector present in Sweden today. 269 student and employees from the School of Business, Economics and Law at the University of Gothenburg participated in online surveys regarding three different products. The findings suggest that there is no significant difference between with brand versus without brand in the consumers’ willingness to pay for private labels. However, when investigating the measurements determining willingness to pay further, significant differences are present for perceived quality and uniqueness in two of the surveyed products. The results are discussed in the article and managerial implications include that the willingness to pay is not affected if the private label brand is visible on the package versus not. However, perceived quality and uniqueness is affected in a negative way by the private label brand. Suggestions for future research are provided.