National brand's response to store brands: Throw in the towel or fight back?

摘要

Though store brands continue to grow in sales and volume, their success is detrimental to national brands. The research work has tried to examine when faced with a potential or realized threat of an store brand, a national brand can compete by pursuing three broad strategies in the positioning space: accommodate, displace, or buffer. The paper explores when an national brand manufacturers would adopt which strategy using a game-theoretic model of a market where consumers are heterogeneous in their valuation of product quality and analyze the product line design of an national brand manufacturers that sells his product(s) through a retailer. Two regimes have been analyzed. In the first regime, the baseline case, the national brand manufacturers is a monopolist in which a set of conditions on the model parameters under which the national brand manufacturers chooses to supply only one national brand product has been presented. In the second regime, the retailer has the added option of procuring an store brands product from independent, dedicated SB manufacturers that supply it at marginal cost. In anticipation, national brand manufacturers' strategic choices of products and prices would be affected has been analyzed. The results have been discussed in terms of two explanatory factors - national brand manufacturers' cost advantage, and differentiation ability. (42 refs.)