Win–win strategies at discount stores

An important development that contributes to store brands’ growing success in the grocery market is the increasing number of discount stores that sell predominantly own, private-label (PL) brands. To fight PLs, manufacturers of national brands (NB) feel increasingly compelled to develop better trade relations with discounters. Some discounters, for their part, are looking for opportunities to differentiate themselves, and to move beyond a pure price-based competition, by extending their assortment with attractive NBs. In this study, we determine what factors drive NB success at discount stores, and lead to positive outcomes for both the manufacturer and the discounter.     

Private label line proliferation and private label tier pricing: A new dimension of competition between private labels and national brands

In this study, we explore the impact of private label (PL) proliferation and pricing on consumer demand and derive profit implications for different scenarios: (i) dropping or adding a line (kids, health or muesli) within a PL tier and (ii) changing the PL tier prices. We use a representative household panel dataset (2008–2009) for the ready to eat (RTE) cereal category of two leading U.K. grocery retailers. Our results indicate line extension/delisting within the standard and premium PL tiers cannibalize each other and also steal business from NBs for the kids, healthy and muesli lines. Overall, premium PLs seem a profit generator tier that allows some room for further brand variant introductions within this tier. However, the retailer is better off, in terms of profits, if the proliferation within the economy PL tier is downgraded. Furthermore, both the retailer and NB manufacturers gain from an economy, standard and premium PL price increase, as it leads to a demand shift to NBs accompanied by a profit lift for the retailer.     

The battle of traditional retailers versus discounters: The role of PL tiers

For grocery retailers in Europe, intense competition from hard discount formats like Lidl and Aldi is an established part of the competitive landscape. Due to the highly competitive retail environment, traditional retailers’ private label (PL) tiers are now set to become the new battle ground in this competition. This study analyzes how PL tiers (i.e. economy, standard and premium) affect the competition between discounters and traditional retailers. We use a representative UK household panel dataset (2009–2010) for the ready-to-eat cereal and canned soup category, and estimate a demand model for the choice between national brands (NBs) and PL tiers across the top-7 UK retailers. Using our demand estimates, we conduct several counterfactual experiments that predict consumer responses to different strategies of traditional retailers and discounters in their fight for the consumer. In particular, we compare the effectiveness of three types of PLs offered by traditional retailers to fight discounters: economy PLs versus standard PLs versus premium PLs. We find that premium PLs are not very effective strategies for traditional retailers to fight with discounters. On the other hand, economy PLs manage to steal some market share from discounters, but as a downside they also cannibalize traditional retailers’ standard PLs. Standard PLs seem the most effective tool to fight with discounters, since they steal most market share from discounters (and NBs). From the point of view of the discounters, our results indicate that discounters benefit from a further increase in their NB offerings (assortment depth) as well as from a price cut in their own PLs.     

Taking private labels upmarket: Empirical generalizations on category drivers of premium private label introductions

Premium private labels (PLs) are considered one of the hottest trends in grocery retailing. Still, retailers do not feel the need to introduce premium PLs in every category. Generalizing across approximately 150 categories for six retailers from two countries that already carry premium PLs for several years, the authors find that retailers are more likely to introduce premium PLs in categories with a higher industry PL share, and with a more proliferated assortment in terms of standard PLs. However, retailers are also aware of the risk of creating PL fatigue at high levels of standard PL proliferation. Further, premium PLs are more likely to be introduced in categories with more frequent price promotions, a longer interpurchase time, a higher need for variety, and higher functional, but lower social, risk. In addition, retailers consider category growth and the prevailing practice of their country's premium-PL pioneer when deciding in which categories to also introduce a premium PL. Finally, when NBs spend a smaller amount on advertising and NB proliferation is moderate, premium PL introductions are more likely. Importantly, while some of the earlier empirical generalizations on factors conducive to a standard PL entry still hold for a premium PL entry, new variables need to be considered as well, while other insights need to be updated to better reflect the new reality of higher-quality/higher-price premium PL introductions.     

The moderating impact of perceived globalness on consumers’ purchase intentions for copycats: The pleasure of hurting global brands

Copycats or “me‐too” brands imitate prominent features of market leaders with the intention to benefit from consumers’ positive associations of the imitated brand. However, the imitated market leader can be perceived as being local (=in‐group) or global (=out‐group). Employing social identity theory, Study 1 examined the interaction between copycat strategy and perceived globalness of the brand, showing that consumers have higher purchase intentions for global copycats versus a local counterpart. Study 2 shows that the interacting effect of copycat strategy and perceived globalness is moderated by consumer ethnocentrism. Further, authors demonstrate that a global copycat elicit greater schadenfreude (vs. local brand), which in turn increases consumers’ purchase intentions. Subsequent mediation analysis shows that ethnocentric consumers experience schadenfreude upon encountering copycats of global brands, which in turn increases purchase intention, whereas low ethnocentric consumers show higher purchase intentions for local differentiated brands because they deem a copycat strategy as unacceptable. Finally, Study 3 examines whether the results from Studies 1 and 2 continue to hold for theme copycats.     

Slotting Allowances in China: Perspectives of a Large Manufacturer Versus a Large Retailer in the China Grocery Market

ABSTRACT

Slotting allowances and contractual marketing agreements pervade the retail environment in the United States. They represent a profit center for large retailers who exercise market power and represent a cost center for large manufacturers. Many manufacturers have alleged that they are “held captive” to procure prime retail space. Despite the influx of retailers and manufacturers based in the United States, the deployment of slotting allowances in China is less prevalent but does pervade the grocery sector. The purpose of this study is therefore to explore the attitudes of large Western manufacturers and retailers toward the issue of slotting allowances in the China grocery market through a qualitative study. In-depth interviews were conducted with key decision-makers from Coca-Cola (manufacturer) and Carrefour (retail hypermarket) to critically explore their attitudes toward slotting allowances. The interviews reveal principal differences grounded in cultural norms.     

The future of private-label markets: A global convergence approach

Private-label (PL) shares are characterized by considerable heterogeneity across both countries and categories, not only in their current level, but also in the rate at which they are growing. This creates ambiguity about their remaining growth potential. To offer insights into the likely long-run PL shares, we take a forward-looking perspective by means of a convergence model. We apply the model to two unique datasets that together span more than 50 countries, both emerging and developed, across more than70 CPG categories. We find evidence of partial PL convergence: even though PL shares will become more similar, part of the currently observed heterogeneity will persist. The future evolution in two key marketing instruments, new-product introductions by both NB manufacturers and retailers and the NB-PL price gap, is found to play a substantial role in shaping the global PL landscape of the future. This impact is not uniform, however, but depends on the category, and varies with the retail, economic and cultural context. In addition, the long-run impact of both marketing drivers differs from what is currently observed, suggesting that managers should not adhere too strongly to earlier practices when planning for the future.     

山寨营销的动因解析及实践启示

山寨现象非常普遍,山寨营销已成为弱势品牌营销创新的模式之一。首先回顾了弱势品牌的山寨营销的起源、背景、定义和类型,然后从品牌成长路径、消费者行为变迁、市场营销战略、利基营销和长尾理论等多个理论角度阐述弱势品牌开展山寨营销的动因。山寨营销的实践启示是山寨营销是在中国特定的市场环境中产生和发展起来的一种弱势品牌快速和低成本发展的营销方式之一,适合企业在初创时期或实力弱小阶段的品牌建设思路。     

A Cross-Category Analysis of Shelf-Space Allocation,Product Variety,and Retail Margins

Retailers' allocation of shelf space as well as the breadth of varietyoffered varies across categories. Many researchers have developedheuristics for determining what retailers should do with regard tothese decisions. We explore how these constructs are actually relatedin practice. We utilize data obtained from Marsh Supermarkets, a largeIndianapolis-based grocery retailer, to explore the relationshipsbetween these variables. The results of this analysis are a set of rawfacts concerning the relationship between some of grocery retailers'more important category-level decisions.     

An evolutionary game theoretic model for analyzing retailers’ behavior when introducing economy and premium private labels

The significant growth of Private Labels (PLs) has led to a growing competition between National Brand (NB) manufacturers, on the one hand, and retailers, on the other; while manufacturers strive to achieve enhanced customer loyalty through such measures as innovation and advertising, retailers focus their efforts on offering high-quality products. This paper considers for the first time a supply chain consisting of one NB manufacturer and a population of retailers under two scenarios. In the first, each retailer sells NB and chooses either to introduce an Economy Private Label (EPL) or not. In the second scenario, each retailer chooses either to introduce a Premium Private Label (PPL) or not. To solve the problem, an evolutionary game is introduced and the retailers’ behavior is analyzed. Using two numerical examples, parametric analysis and managerial insights are also provided. It is found that the entire population chooses the strategy of introducing a private label (EPL or PPL) and that this strategy yields greater profits for both the manufacturer and the retailers than other strategy profiles might do. In addition, it is shown that both the retailers and the manufacturer gain more profits by introducing a PPL rather than an EPL.     

Modelling consumer responses to an apparel store brand: Store image as a risk reducer

To make informed private label (PL) strategy decisions, retailers must understand the factors influencing consumer's brand choices. Previous PL studies have investigated grocery products, and ignored unique features of different types of own brands. We investigate attitudes towards buying a retailer-endorsed brand, or store brand (SB), in apparel retailing. Customers of a Finnish department store were surveyed. Data were analysed using Structural Equation Modelling (SEM). Perceived value and quality of SB apparel appear to be the main drivers of purchase intentions. Perceived risk reduces SB value and purchase intentions. Store image affects purchase intentions indirectly, by reducing perceived risk and increasing SB quality perceptions.     

The role of consumers' attitude towards economic climate in their reaction to ‘PL-only’ assortments: Evidence from the United States and Spain

Retailers’ assortment rationalisation strategies have found an “ally” in the current global economic crisis. Indeed, retail boycotts of individual brands in economic recession contexts are not uncommon in the CPG industry. In fact, many of the consumers who began buying PLs during the economic recession are continuing their PL behaviour post-recession. So, what is the role of the economic climate in consumers’ reaction– in terms of store loyalty – to retailers’ NB delisting decisions? Is it so relevant? This paper examines how consumers’ attitude towards the economic climate influences his/her reaction to retailers’ strategy of offering ‘PL-only’ assortments in the context of an economic slump (Spain) compared to a context of economic recovery (U.S.). To do so, we have designed a controlled online experiment for two large consumer panels in the Spanish and the U.S. markets. Our results suggest that consumers’ acceptance of ‘PL-only’ assortments is a separate phenomenon rather than merely being a “consequence” of the current economic situation. Nevertheless, in an economic recovery, such ‘PL-only’ assortments do not appear to be the best strategy.     

New product success in the consumer packaged goods industry: A shopper marketing approach

Marketing activities that influence shoppers along the various stages of their path-to-purchase are gaining attention from both manufacturers and retailers. Using a dataset with detailed information on 105 new products (NPs) launched in the U.K. by 44 leading brands and sold across 13 major retail banners, we provide strong support for the prominent role of both upper- and lower-funnel marketing actions that influence consumers before (upper) or during (lower) their shopping trip. We show which of these shopper-marketing instruments have the largest effect on NP performance at a retailer, and whether and how their effect is moderated by the retailer's store context. When it comes to NP success, the lifeblood of CPG companies, the lower-funnel marketing actions targeting shoppers directly at the point-of-purchase predominantly decide your fate. Thus, manufacturers should work ever harder to collaborate with retailers and push the store-specific shopper-marketing instruments in a favorable direction through information sharing and tailoring of their marketing program to individual retailers. Indeed, not all news is bleak for brand manufacturers. We identify five pieces of good news that brand manufacturers can use to their advantage.     

Who Benefits from Price Promotions?

This article reports new research on price promotions in grocery products. The results are striking and taken with other evidence they suggest that few consumers benefit from deep-discount price promotions. The study raises big questions about how manufacturers and retailers allocate their marketing budgets - and even about whether companies' management accounting and remuneration practices may be leading to reduced profits.     

Antecedents of private label attitude and national brand promotion attitude: similarities and differences

A model that addresses the similarities and differences in conceptual antecedents of attitudes toward private label grocery products and national brand promotions is proposed and tested. The proposed model is tested using a sample of 300 consumers who were recruited from grocery stores, provided behavioral data from sales receipts of their shopping trip, and responded to a survey that contained multi-item construct measures. We predict and find in the study that both price and nonprice related constructs impact both private label attitude and national brand promotion attitude, but the directionality and strength of several of these relationships differ. Implications of these findings for retailers and national manufacturers are discussed.     

Retail environment and manufacturer competitive intensity

We study how the intensity of competition and the degree to which manufacturers enjoy market power depends on the retail environment in a given market. Past research has discussed the growing importance of retailers and the power they enjoy over manufacturers. Yet, the empirical literature to date has not determined which retail characteristics have the largest impact on competitive behavior.Our starting point is the estimation of a structural demand-and-supply model, where both consumers’ decisions and the strategic interactions between manufacturers and retailers are explicitly modeled. We identify the type of competitive behavior of manufacturers by measuring the deviation from a Bertrand-Nash equilibrium. This measure of competitive conduct is expressed as a function of key retail characteristics such as size of the retailer, its assortment depth, and category expertise.We illustrate the proposed approach using data for the ground coffee category in Germany. Our findings indicate that retail characteristics have indeed a significant effect on competitive intensity among upstream firms and on their ability to exercise market power. Hence, a manufacturer considering entry into a new market should not only take into account its competitors but also the specifics of the retail environment in this market.     

Opportunities for active stock-out management in online stores: The impact of the stock-out policy on online stock-out reactions

This paper investigates the impact of an online retailer's stock-out policy on consumers’ category purchase and choice decisions. We investigate three different policies: (1) stock-outs are immediately visible and there are no replacement suggestions, (2) stock-outs are only visible after purchase attempts and (3) stock-outs are immediately visible but a replacement item is suggested. Results from an online grocery shopping experiment reveal that the adopted stock-out policy has a significant impact on both decisions. Making stock-outs not immediately visible creates confusion and intensifies the consumer's loss experience, thereby reducing the tendency to buy in the category. Suggesting a replacement item, in contrast, facilitates the substitution decision and slightly reduces the purchase cancellation rate. It also substantially increases the suggested item's choice probability. Yet, this effect disappears when higher-priced - suspicious - items are suggested. Overall, these results indicate that online grocery retailers have an interest in pursuing open and convenience-oriented stock-out policies.     

Cadbury and the rise of the supermarket: innovation in marketing 1953–1975

This article uses company archival data, supported by evidence from the trade press, to examine the development of the manufacturer–retailer relationship in the case of Cadbury and the supermarket retailers distributing its products in the period 1953–1975. It reveals the influence upon Cadbury’s marketing strategies and practices of the increasing importance of supermarket retailing in relation to the confectionery as well as the grocery goods trades. It also provides new insight into the significance of these changes for Cadbury’s relationships with other manufacturers, and with small-scale retailers typified by confectioners, tobacconists and newsagents.     

Retailers' and manufacturers' price-promotion decisions: Intuitive or evidence-based?

Consumer price promotions account for more than half of many manufacturers' marketing budgets, and require a significant time investment to manage. Amidst the considerable research on price promotions, little academic attention has been paid to how manufacturers and retailers make price-promotion decisions. Based on in-depth interviews with a broad range of managers, this study investigates factors that influence price-promotion decisions in durable and consumer goods industries. Findings suggest that (1) intuition and untested assumptions are the main inputs into these decisions; (2) practitioners lack solid empirical evidence to guide their actions, and their beliefs are often in stark contrast with academic knowledge about the effectiveness of price promotions; and (3) price promotions are typically not evaluated against the objectives according to which they were justified, impeding appropriate feedback for future decisions. Research priorities are outlined to advance evidence-based decision-making in this area.