The brand-equity implications of selling through hard discounters

The rising popularity of hard discounters, along with their increased willingness to add national brands to their assortments, presents new opportunities for brand manufacturers. While expanding into the hard-discount format may increase national brands’ distribution coverage and thereby enhance their equity, several brand managers remain reluctant to sell through this more down-market format, fearing a loss of image. Using an empirics-first approach, the authors study the effect of hard discounters’ national-brand listings on brand equity. They empirically test a rich contingency framework and find that the brand-equity impact is highly dependent on various category characteristics. Specifically, the effects are more auspicious in less utilitarian categories, and in categories characterized by higher purchase frequency and lower household penetration. The authors further find that approximately one-tenth of the nearly 150 brand listings studied had adverse brand-equity implications. At the same time, among the brands that refrained from being distributed through hard discounters, 80% appear to have foregone an opportunity to increase their equity. The authors conclude with actionable guidelines to mitigate both types of error