Store-Brand Introduction and Multilateral Contracting

2021 ◽  
Author(s):  
Quan Zheng ◽  
Hongseok Jang ◽  
Xiajun Amy Pan
Keyword(s):  
Information Leakage ◽  
Problem Definition ◽  
Alcoholic Beverages ◽  
Noncooperative Game ◽  
Store Brand ◽  
Information Structures ◽  
National Brand ◽  
Market Shares ◽  
Boundary Equilibrium ◽  
Sequential Contracting

Problem definition: We explore the impacts of store-brand (SB) introduction on multilateral contracting in vertical supply relationships that involve two upstream national-brand manufacturers (NBMs) selling through a common retailer. Two different information structures are scrutinized: simultaneous (secret offers) versus sequential contracting (public offers), essentially different timing by which the NBMs contract with the retailer. Academic/practical relevance: SB products are prevalent nowadays; however, the market shares in different categories vary substantially, from negligible sales (e.g., alcoholic beverages) to more than half of the total sales (e.g., milk). As retailers encroach on the NBMs’ product market, their relationships are reshaped accordingly. Thus, investigating whether SB introduction would overturn the conventional wisdom about multilateral contracting is pertinent. Methodology: The methodology is noncooperative game theory. Results: We identify a boundary equilibrium where the sale of the SB is negligible, but its presence enables the retailer to intensify the upstream competition and elicits better wholesale contracts. We show that this equilibrium tends to occur in a wider region under sequential contracting than under simultaneous contracting. In the boundary equilibrium of sequential contracting, the NBM could entail a first-mover advantage, a stark contrast to the second-mover advantage in the nonboundary equilibrium. Further, as opposed to the uniqueness of sequential contracting, we characterize a continuum of boundary equilibria under simultaneous contracting such that symmetric NBMs may even set asymmetric wholesale prices so as to drive the SB out of the market. Managerial implications: We provide a rationale for the observed negligible sales of certain SBs and further shed light on the choice between public and secret offers. Public offers could perform better for the retailer who, in turn, benefits from information leakage. With public offers, the NBMs’ preference for the leadership could also be reversed for SBs with negligible sales. Because of the intricate impact of SBs on contracting sequence, these two instruments should be jointly analyzed.

On Co-opetitive Supply Partnerships with End-Product Rivals: Information Asymmetry, Dual Sourcing and Supply Market Efficiency

2021 ◽  
Author(s):  
Seung Hwan Jung ◽  
Panos Kouvelis
Keyword(s):  
Wholesale Price ◽  
Information Leakage ◽  
Problem Definition ◽  
The Other ◽  
Theoretic Model ◽  
Market Information ◽  
Dual Sourcing ◽  
Strategic Sourcing ◽  
Demand Information ◽  
Separating Equilibrium

Problem definition: We consider opportunities for cooperation at the supply level between two firms that are rivals in the end-product market. One of our firms is vertically integrated (VI), has in-house production capabilities, and may also supply its rival. The other is a downstream outsourcing (DO) firm that has better market information. The DO is willing to consider a supply partnership with the VI, but it also has the option to use the outside supply market. Academic/practical relevance: Such co-opetitive practices are common in industrial supply chains, but firms’ co-opetitive strategic sourcing with the potential of information leakage has not been examined in the literature. Methodology: We build a game-theoretic model to capture the firms’ strategic interactions under the co-opetitive supply partnership with the potential information leakage. Results: The DO exploits its information advantage to obtain a better wholesale price from the VI and may use dual sourcing to protect its private information. Anticipating that, the VI may offer wholesale price concessions as an information rent to obtain the DO’s information. Our work identifies demand uncertainty and efficiency of outside supply market as the factors affecting the VI’s pricing decision and the resulting equilibrium. Pooling equilibrium arises often, but in a few cases, the equilibrium is separating. At the separating equilibrium, the DO always single sources, either from the VI or the independent supplier depending on the demand state. The VI benefits from ancillary revenue-generating opportunity, and from information acquisition in a separating equilibrium. On the other hand, the DO’s benefit is a cheaper price in exchange for market information in a separating equilibrium. In the pooling case, the DO uses dual sourcing to hide demand information, especially in the high demand case, and to better supply the end-market through his accurate demand information. Managerial implications: Our work provides useful insights into firms’ strategic sourcing behaviors to efficiently deal with the potential of information leakage in the co-opetitive supply environment and for the rationale behind such relationships often observed in industries.

Store-brand introduction and production arrangement in the presence of multiple retailers

2020 ◽  
Vol 54 (3) ◽  
pp. 827-843 ◽  
Author(s):  
Rong Cheng ◽  
Weimin Ma ◽  
Hua Ke
Keyword(s):  
Game Theory ◽  
Real World ◽  
Stackelberg Games ◽  
Store Brand ◽  
Store Brands ◽  
National Brand ◽  
Model Interaction ◽  
National Brands ◽  
The Real ◽  
Retailing Business

Store brands play an increasingly important role in retailing business, leading more and more retailers to introduce store brands. Abundant research focuses on competition between store brands and national brands and counterstrategies that national-brand manufacturers can take to counter store-brand introduction. A little research studies the store-brand production issue, however, all under single-retailer scenarios. To approach the real world, we employ game theory to model interaction between a national-brand manufacturer and multiple locally monopolist retailers, one of whom has capability and motivation to introduce a store brand. Five Stackelberg games are build and solved to investigate: how the presence of the non-store-brand retailers affects the store-brand retailer’s decision on and profitability in the store-brand introduction; how the store-brand retailer should arrange store-brand production; whether there is a win–win situation where both the store-brand retailer and the national-brand manufacturerare better off with the latter producing the store brand. Accordingly, our study offers a novel rationale for why so many, especially leading, national-brand manufacturers are involved in the store-brand production. Some useful managerial suggestions are proposed on the store-brand introduction and production arrangement.

Go Upscale? Quality Competition between National Brand and Store Brand

2018 ◽  
Author(s):  
Tulika Chakraborty ◽  
Satyaveer Singh Chauhan ◽  
Xiao Huang
Keyword(s):  
Quality Competition ◽  
Store Brand ◽  
National Brand

scholarly journals Exploring the Effect of Consumers’ Food-Related Decision Making Styles on National Brand vs. Store Brand Choice

2017 ◽  
Vol 9 (1) ◽  
pp. 46
Author(s):  
Banu Kulter Demirgunes ◽  
Bulent Ozsacmaci
Keyword(s):  
Decision Making ◽  
Food Product ◽  
Food Products ◽  
Lower Price ◽  
Store Brand ◽  
Consumer Decision Making ◽  
National Brand ◽  
Decision Making Styles ◽  
Fashion Consciousness ◽  
Brand Choices

It is important for marketers to understand individuals’ buying decisions in a competitive environment. The concept of decision making style is one of the key determinants of consumers’ behavioral patterns. This study aims to explore the effects of consumers’ decision making styles on buying national and store brand food products. To examine consumer decision making styles, Sproles & Kendall’s (1986) The Consumer Style Inventory (CSI) is adopted for the study. The framework of the study is based on eight consumer decision making styles, expected to shape consumers’ national and store brand choices on food products. The empirical analysis is based on data obtained from consumers living in Kırşehir, a city in Turkey. Questionnaires are handed over to customers of retail stores both selling national and their own brands. The sample consists of 400 customers. The data is gathered by using convenience sampling and face-to-face survey methods. Multiple regression analysis is used to test some hypotheses of the research and to compare consumers’ national and store brand choices in the context of their decision-making styles. Besides, independent samples t-test and one way ANOVA are also used to see whether national and store brand choices significantly differs in demographic characteristics. The results of the study reveal that lower price seeking, habituation/brand loyalty, recreation consciousness and impulsiveness/carelessness have significant effects on the choice of store brand food product, whereas novelty/fashion consciousness, confused by over choice and value seeking have statistically significant effects on consumers’ choices of national brand food products. Lower price seeking is found to have the strongest effect on consumers’ store brand choices, whereas novelty fashion consciousness has the strongest effect on national brand food product choice. Besides, both store and national brand food product choices differ according to gender and income level. 

Sign in / Sign up

Export Citation Format

Share Document