Javier Cebollada

Price formation in channels of distribution with differentiated products

Abstract This paper presents a theoretical and empirical study of price formation in markets where goods differ in two attributes, perceived quality of each variety, and service provided by the store where the good is sold. Price competition in the vertically differentiated market is modeled as a two-stage game where manufacturers choose the contract that determines wholesale prices, and retailers choose consumer prices. One important novelty of the paper is that it contemplates competition between brands of different quality in the same store, and competition between brands of the same quality sold at different stores. This is in fact the situation observed in the domestic detergent market and the predictions of the model can be used to guide the empirical analysis of the data available for such market in the area of Barcelona, Spain.

Assesing the success of private labels online: differences across categories in the grocery industry

This paper analyses online competition between private labels and national brands. Purchase data from a grocery retailer operating both on and offline are used to compute two measures of competition (intrinsic loyalty and conquesting power) for both the private label, and what this paper terms the “reference brand” (a compound of the different national brands within a category), in 36 product categories. The results show that the competitive position of the private label, relative to that of the reference brand, varies across categories and across channels. Using the framework devised by Steenkamp and Dekimpe (Long Range Plan 30(6):917–930, 1997. https://doi.org/10.1016/S0024-6301(97)00077-0) we combine the two computed measures of competition, and classify the private label as a miser, a giant, a fighter or an artisan in each channel and category. The results show: (1) that private labels significantly improve their competitive position online; and (2) that this improvement is not equal across all categories.

The effect of price promotions on consumer shopping behavior across online and offline channels: differences between frequent and non-frequent shoppers

This study evaluates the differential effect of price promotions on brand choice across the offline and online channels of a grocery retailer. We use scanner data to analyze the purchasing behavior of orange juice of a sample of multichannel customers of a large European grocery chain selling across offline and online stores. We find that promotions have a higher impact on offline than in online purchases. In fact we don’t find a significant effect of promotions in the online channel. We also find a moderating effect of purchase frequency in the category, in the sense that frequent customers are more influenced by promotions than infrequent customers. While this effect is clear in the offline channel, it is not found in the online channel. There is also a high degree of heterogeneity in the effect of promotions among consumers, specially in the offline channel. It is important to remark that these differential effects across channels have been found for the same sample of multichannel customers, meaning that the same consumers are more affected by promotions offline than online. Potential causes and consequences of these results, as well as implications for management, are also discussed.

Comparing Price and Loyalty Effects between Online and Offline Channels in the Grocery Industry: The Moderating Effect of Product Characteristics

This paper investigates online and offline consumer choice behavior. Empirical research comparing online and offline consumer behavior has traditionally been based on comparisons between different sets of consumers, and therefore has been unable to isolate the effect of the Internet on consumer behavior from consumer-specific effects. Using online and offline grocery shopping data from the same sample of consumers, we show that consumer choice behavior differs across the two channels. When shopping online, consumers are less price-sensitive, while displaying stronger brand and size loyalty. In addition, results show that product category characteristics play a role in these differences. The price effect differences are greater in sensory and food categories, whereas the differences in brand loyalty effects are stronger in sensory and, surprisingly, non-food categories. These results should help firms to design better online business strategies.