Cross-country differences in private-label success: An exploratory approach

Why do private labels (PLs) enjoy a large market in some countries while hardly penetrating others? What makes a market favorable to PL-product development? Can we identify drivers that explain differences between countries in terms of PL performance? This study aims at addressing these relatively less-researched questions in international marketing literature. We propose an approach that combines market structure, country segmentation and the sensitivity of potential factors in a unique framework. Namely, we use a latent structure formulation to allow for the creation of segments in order to capture the potential heterogeneity among markets and outline their underlying determinants in terms of PL adoption. We provide an empirical illustration using a frequently purchased product category in 71 countries. Our results uncover that the international market for private label is characterized by two distinct patterns.