The connection between manufacturer and private label brands and brand loyalty in chocolate bar buying decisions - A hybrid choice approach

Abstract

With the increase in health awareness more and more attention is paid to how manufacturers can respond to ever-changing consumer needs. This is especially true for the market of popular consumer goods such as chocolate. In order to understand Hungarian consumers' preferences in chocolate bars, we used the stated choice experiment method in our research. The attributes of our experiment included brand (manufacturer and private label), type (milk, dark, and white), a health claim (sugar free), as well as price, and our model estimations were done using the multinomial logit specification. In order to increase the explained rate of utility perceived by respondents, we also estimated a hybrid model containing a latent variable (representing consumers' brand loyalty). Our results reveal that the respondents showed a clear preference for manufacturer brands compared to private label brands. Regarding the type of chocolate, we found that milk chocolate received the most positive evaluation, which was followed by dark and white chocolate, respectively; we also demonstrated that sugar free products have a negative rating. In line with our preliminary expectations, a rise in the price of the product has a negative impact on utility as perceived by consumers. Brand loyalty is most characteristic of young and highly educated respondents, and a rise in brand loyalty lead to an increase in the preference towards manufacturer brand products compared to private label brand products.

Keywords: Brand loyalty; Chocolate bar; Hybrid choice modelling; Manufacturer brand; Private label brand; Willingness-to-pay.