A combined segmentation and demand model for store brands

This paper presents an empirical study on store brand demand and its determinants. A two‐stage model is considered, in which the consumer decides whether to buy store brands, as well as how to allocate category expenditure between retail and manufacturer brands. The first stage identifies the segment of store brand customers and the second level determines customer demand. The model incorporates consumer characteristics and examines their effects in the light of behavioural data. Discrete and continuous outcomes flow from the same preference structure and are determined by consumer characteristics. The results provide insights into explanatory factors and useful implications for brand management. Extensions of the present work are also discussed.