Competition between Private Label and National Brand for Health-differentiated Food Product: A Canadian Retailing Case
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Retailers in Canada are beginning to introduce private labels to gain
vertical bargaining power over manufacturers and horizontal differentiation
among retailers. Product differentiation in health and wellness is an emerging
trend for both private labels and national brands. This study applies a model
derived from a random utility nested logit model to estimate the extent to
which consumer choice of health-related food attributes has affected retailer
pricing and brand-level competition, using the Distance-Matrix (DM) approach to
identify the location of both private label and national brands of canned soup
market in their attribute space. It suggests that private label does not have a
positive effect on retailers’ demand.