Store Brands and Category Captaincy
نویسنده
چکیده
In several product categories, retailers have launched store brands to compete with national brands on both price and quality. Furthermore, in some of these categories, retailers have appointed a national brand manufacturer as category captain to help expand its sales in all quality tiers within the category. However, category captains may exhibit opportunistic behaviors and even diminish the competitiveness of the store brand. Using a model of vertical differentiation, we aim to understand the strategic implications of category captaincy for the competing national brand, consumers, and the store brand. One may believe that on adopting category captaincy, the retailer gives up the power emanating from the store brand. However, our analysis shows that the retailer leverages the power to make category captaincy more profitable. Our naive intuition also suggests that category captaincy may hurt both the competing manufacturer and consumers. In a mature product category, however, the presence of the store brand turns category captaincy strictly beneficial to the competing manufacturer. In an emerging product category, category captaincy always improves consumer welfare irrespective of the presence of the store brand. Finally, when allowed to make product line recommendations, the category captain recommends the removal of the competing national brand. The resulting pruning of the product line increases both the total channel profits and consumer welfare.
منابع مشابه
The Competitive Consequences of Using a Category Captain
Many retailers designate a national brand manufacturer as a "category captain" to help manage the entire category. The category captain is involved in decisions that a¤ect not only its own brands, but also those of its rivals. We examine how engaging a self-interested category captain a¤ects the category captain, the retailer and the rival manufacturer, when the category captain is responsible ...
متن کاملPositioning of Store Brands
We consider the retailer’s store brand (SB) positioning problem in a market with two national brand (NB) competitors. In the context of our model, two brands are assumed to be positioned close to each other if the “perceptual” distance between the two brands is small, and positioning affects the degree of price competition. Our game-theoretic model indicates that the optimal strategy for the re...
متن کاملProduct Assortment and Pricing in the Presence of Retail Competition and Store Brands
Annual sales of store brands and retailer introductions of new store brands have grown quickly in recent years. We address retailers' product assortment decisions (in terms of store and national brands) and related pricing decisions at two competing retailers, along with pricing decisions of a leading national brand manufacturer. Each retailer can o er the national-brand product and a competing...
متن کاملThe Role of Strategic Pricing by Retailers in the Success of Store Brands
A number of papers have evaluated demand and cost based explanations for the rapid growth and success of store brands. However there has been little empirical investigation of the strategic role of the retailer in facilitating the success of store brands. In this paper, we examine the pricing behavior of a retailer in the ready to eat (RTE) breakfast cereal category in investigating whether and...
متن کامل