Implementing online store for national brand competing against private label

We propose a game-theoretic model in three contexts. First, only the national brand (NB) is offered through a traditional retailer. Second, the private label (PL) is introduced by the traditional retailer. Finally, the NB's manufacturer opens an online store. We reassess the benefit of introducing the PL and investigate the profitability of implementing an online store. We found that the retailer is not always enjoying the PL's introduction. Also, the manufacturer could benefit from that strategy. The quality differential between the NB and the PL, the PL's potential and the cross-price competitions are all important factors to determine the result of PL's introduction. Hence, the manufacturer opens the online store either to counter the threat of such strategy or to expand his market.     

Offering value and capturing surplus: A strategy for private label sales in a new customer loyalty building scenario

The competition between private label brand and national brands in the diaper category is investigated from the view of the private label brand manager. In this category, new customers routinely enter the category buying entry-level diaper sizes (for infants) and then progress to buy larger diaper sizes over time (as their child grows older). Thus, consumer comparisons between the private label brand and national brands are focused on single diaper sizes during any single purchase scenario. Because private label brands are known to suffer from low quality perceptions that often understate the true quality levels of private label brands, this paper advances a pricing strategy to optimize private label performance in the category. The private label brand should price significantly low for small diaper sizes (maintaining a sizeable price gap from national brand competitors). Then, in most cases, the private label brand should shrink the size of this price gap for large diaper size offerings. This strategy will successfully offer initial value to new customers, build private label brand quality perceptions and loyalty, and then capitalize on these gains through higher dollar sales in the late stages of the customer relationship. The price gap shrinking strategy is found to be generally effective, but high national brand competition and too high of an initial price gap diminish the effectiveness of the strategy.     

Private label positioning: Quality versus feature differentiation from the national brand

This paper investigates the retailer's problem of positioning her private label against two national brands in terms of both product quality and product features. Using a demand function derived from consumer utility, we show that the private label's best positioning strategy depends on the nature of the national brands’ competition and its own quality. When the national brands are differentiated, a high quality private label should position closer to a stronger national brand, and a low quality private label should position closer to a weaker national brand. When the national brands are undifferentiated, the private label should differentiate from both national brands.     

Understanding premium private labels: A consumer categorisation approach

Worldwide premium private labels (PPLs) are a new and rapidly growing phenomenon. However to date, little is known about consumers' perceptions of these newer entrants relative to other brand types. Therefore it is difficult for marketers to understand the opportunities and threats created by this new generation of brands. This study examines the ways in which consumers categorise PPLs compared to more traditional value private labels (VPLs) and national brands (NBs) on the three dimensions of quality, value for money and trust. The data includes seven packaged goods categories in three countries, the United States, the United Kingdom, and Australia. The findings show that PPLs sit on a separate island, in between VPLs and NBs in consumer memory. While consumers generally view PPLs as a separate subgroup of brands, PPL are connected to other subgroups in that they are perceived to have the value characteristics of VPLs but quality characteristics of NBs. Finally, consumers with past experience with VPLs have a stronger ability to categorise PLs into distinct brand tiers.     

Effects of pricing strategies and product quality on private label and national brand performance

Using product test ratings and panel data from more than 35,000 participating households in Germany, this study addresses the impacts of price, quality, and promotion shares on the market shares of different products, including national brands and private labels, as well as food and non-food products. The results of a path analysis reveal important differences across the four segments, as well as insights regarding the use of everyday low price and high–low retail pricing strategies. The findings also lead to key implications for manufacturers and retailers.     

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.     

Relationship marketing management: Its importance in private label extension

Relationship marketing aims to generate long-term profitable relationships between partners. In the context of the convenience goods market, the present study considers private labels in traditional categories as a tool to develop effective relationships. The main contribution of the study is the use of the relationship approach to explain private label loyalty and the success of store brand extension strategies. Drawing upon a sample of 434 individual and using EQS software, this study shows that customer experience, satisfaction, trust, and commitment to private labels play an important role in customer loyalty toward private labels in convenience goods, increasing consumers' propensity to buy private labels in new categories such as durable goods. Generating trust and commitment, which ultimately result in loyalty, is therefore a strategic goal and a source of long-term profitability for retailers.     

Managing the consumer-based brand equity process: A cross-cultural perspective

Most consumer-based brand equity (CBBE) models are linear and fail to capture the complexity of the brand equity construct and its benefits in terms of key consumer behavioral outcomes. More complex and dynamic models focusing on CBBE as a process often lack empirical support particularly from more than one country. This study builds on and extends previous research by empirically examining the configural nature of the CBBE building process cross-nationally, and by investigating differences vis-a-vis key consumer behavioral outcomes (namely, willingness to pay a price premium, brand recommendation and repurchase intention). These differences are postulated and explained through culture theory particularly the cultural dimension of individualism/collectivism. Using fuzzy-set/Qualitative Comparative Analysis (fs/QCA), survey data from Greece and Germany support the robustness of the extended CBBE model. The model shows that overall brand equity and consumer behavioral outcomes are created through the brand building, brand understanding, and brand relationship blocks, and identifies core causes and common patterns across countries providing a useful diagnostic tool for international brand management.     

The development of a consumer value proposition of private label brands and the application thereof in a South African retail context

Private Label Brands are of strategic importance to retailers worldwide. However, there is a dearth of knowledge, particularly in emerging markets, as to the manner in which consumers cognitively assess these brands. At the heart of the issue is a gap in knowledge as to how consumers formulate a value proposition in their minds and the effect of loyalty to existing brands. This paper assumes a positivist, hypothetico-deductive approach by attempting to address the question: What are the key drivers of perceived value of private label branded breakfast cereals, taking price, perceived risk and perceived quality into account? Moreover, the study considers how various attributes of brand image contribute to the perception of brands and the extent to which loyalty to established national brands inhibits purchasing intent of private label merchandise. A conceptual model was developed, and tested by means of Partial Least Squares path analysis, using a sample of 482 respondents. The outcome reflects that consumers take cognisance of value through price, risk and quality cues, but that loyalty to existing brands has a minimal effect in the final stage of the model. Moreover, both in- and out-of-store influences were found to play a significant role in the determination of product quality. Retailers therefore possess a number of levers at their disposal to influence perceived value, most notably price, product quality and the perceived risk portfolio, as well as packaging, shelf placement, store environmental factors, etcetera.     

Competition for memory retrieval between private label and national brands

Perceptions of private label brands (PLBs) reside in consumer memory along with national brands (NBs). When a consumer engages in a choice situation, both PLBs and NBs rely on links to retrieval cues in consumer memory to give them a chance of purchase. This study examines the underlying competition between NBs and PLBs across different retrieval cues. The findings show that PLBs link to the same attributes as NBs and so compete with NBs for retrieval. However, while any brand typically competes most with the brands more commonly associated with any specific cue, the study finds evidence of PLB sub-categorization. That is, if a consumer elicits one PLB for a certain cue, he/she has four times the propensity to elicit other PLBs than elicit a NB for that same cue. This heightened propensity suggests that when a consumer learns that one PLB has a particular quality, the consumer generalizes that quality to other PLBs. Therefore, retailers should realize that the image of competitor retailers' PLBs affects the image of their own PLBs.     

Building a human brand: Brand anthropomorphism unravelled

Brand anthropomorphism has been found to enhance the ability of consumers to recognize the inherent value of brands. However, there is limited knowledge among practitioners on how to build a brand with humanlike characteristics. After a literature review of brand anthropomorphism in general and the theory of warmth and competence in particular, we present the Human Brand Model of how to build a brand that is perceived to be human. There are four steps in this process; the first three indicate the brand inputs and the last indicates the results of those inputs. This model guides brand managers on how to make their brand more human. The use of this model should result in the organization having an excellent brand reputation; stronger, more meaningful relationships with its customers; and improved brand loyalty.     

The influence of retailing-mix levers on private label market share: The case of the Italian FMCG market

An in-depth analysis of the impact of retailing-mix levers on private label market share in the Fast Moving Consumer Goods sector in Italy is made. The direction and intensity of the impact of assortment, price and sales promotion is measured for different product categories. OLS and GMM regressions run on an IRI Group dataset indicate a strong positive effect of product range, which can be considered as a proxy of on-shelf brand visibility. Increasing private label assortment share thus appears to constitute the key supply-side factor in augmenting sales share on the Italian grocery retailing market.     

Building a strong services brand: Lessons from Mayo Clinic

A strong services brand is built and sustained primarily by customers’ interactions with the provider. A services branding model depicts the dynamics of brand creation. From the interrelationships among the presented brand, external communications, and customers’ experiences emerge brand awareness, meaning, and, ultimately, equity. The Mayo Clinic case study illustrates the services branding model by showing how one organization has created, extended, and protected a powerful brand through an unwavering commitment to the well-being of its customers. Managers outside of healthcare can benefit from three branding lessons embedded in the Mayo Clinic story: (1) attend to organizational values; (2) play defense, not just offense; and (3) turn customers into marketers.     

Bundling as a new product introduction strategy: The role of brand image and bundle features

Marketers can bundle an unknown brand with a strong brand as a new product introduction strategy. Drawing upon the categorization theory and the elaboration likelihood model, this study examines how a new brand can benefit from bundling with a strong brand. The results of two studies indicate that consumers’ quality perception of a new brand will be affected by the brand image of a bundle partner, and this effect is moderated by the bundle forms and the complementarity of bundle components. Academic and managerial implications of these findings are presented, along with suggestions for further research.     

Taking a global view on brand post popularity: Six social media brand post practices for global markets

Brand post popularity positively relates to consumers’ purchase intentions, actual sales, and stock prices. Research suggests that social media posts should be vivid, practical, interesting, personalized, and interactive. However, cross-cultural research also suggests that practices might not be equally effective across different regional markets. While vividness and practicality could be consistently important across cultures, characteristics of interest, personalization, and interactivity might need to be adapted to the cultural conditions of specific target markets. We consider how individualism/collectivism, long-term orientation, uncertainty avoidance, power distance, and high-context/low-context cultures could influence brand post effectiveness. We provide suggestions for how to manage social media brand post popularity from a cross-cultural perspective to inform both domestic and global social media marketing campaigns. Suggested practices include: (1) making brand posts engaging; (2) targeting the ‘I’ in individualistic cultures and the ‘we’ in collectivist cultures; (3) focusing on consumers’ identity in less long-term oriented cultures and on functional information in more long-term oriented cultures; (4) ensuring that posts help reduce uncertainty; (5) planning for one-way communication in higher power distance countries and two-way communication in lower power distance countries; and (6) making messages less direct in higher-context cultures and more direct in lower-context cultures.     

Used goods, not used bads: Profitable secondary market sales for a durable goods channel

The existing literature on channel coordination typically models markets where used goods are not sold, or are sold outside the standard channel. However, retailers routinely sell used goods for a profit in markets like textbooks. Further, such markets are characterized by a renewable consumer population over time, rather than the static consumer population often assumed in prior literature. We show that accounting for these market characteristics alters the optimal contract form as compared to the contracts derived in prior research. In particular, when new goods are sold in both the first and second periods of our model, the optimal contract differs from those in prior literature in that it can exhibit a negative fixed fee in the second period and requires contracting over the resale price in the second period. The model shows that the manufacturer makes higher profits from allowing used-good sales alongside new-good sales than from shutting down the retailer-profitable secondary market, and that unit sales expand with a profitable secondary market over those achievable without a secondary market. Furthermore, in contrast to previous investigations of durable goods markets that ignore the possibility of a retailer-profitable secondary market, we show conditions under which the manufacturer would optimally choose to sell no new goods in the second period, ceding the market entirely to the used-goods retailer. This research thus expands our knowledge of how durable goods markets work by incorporating the profitable operation of a retailer-run resale market.

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