Adding budget and premium private labels to standard private labels: Established empirical generalizations, emerging empirical insights, and future research

Standard private labels (PLs) have been the topic of multiple prior reviews. Having been leapfrogged by business practice, the marketing literature has only recently witnessed a surge in interest in multi-tier PL offerings. These typically include a budget and/or premium tier in addition to the omnipresent standard PL tier. This study offers a systematic review of recent empirical findings on budget and premium PLs. Our review is structured along the following four research questions: (i) why do retailers introduce budget and premium PLs, (ii) who buys budget and premium PLs, (iii) what is the nature of the competition among the different tiers and with national brands, and (iv) what are the budget and premium PL tiers’ respective success drivers? While standard PLs still generate the largest volume sales, premium PLs (which are not only characterized by a higher dollar margin but which are also most beneficial to the retailer's image) are currently driving PL growth. Budget PLs, in contrast, are hardly growing in volume share, have a lower absolute and percentage margin, and are found to be less effective in fighting discounters than initially thought. We identify some commonalities across the different tiers but also report on many differences. Various avenues for future research are presented.