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.     

The Power of Innovativeness in Manufacturer–Retailer Relationships

ABSTRACT

Purpose: Retailers often challenge manufacturers through aggressive store brand policies and severe listing constraints. This study investigates manufacturer innovativeness as a managerial lever to shift the power balance between manufacturers and retailers.

Methodology/approach: Using data from 277 senior managers of Swiss and German consumer goods manufacturers and analyzing these data with structural equation modelling, the authors test hypotheses about the impact of manufacturer innovativeness on manufacturer–retailer relationship characteristics (i.e., retailer dependency, store brand aggressiveness, and listing constraints).

Findings: The study demonstrates that manufacturer innovativeness enhances retailer dependency, which in turn positively affects overall manufacturer performance. This relationship can be explained further: By increasing retailer dependency, manufacturers suppress retailers’ store brand aggressiveness and attenuate retailers’ listing constraints. Store brand aggressiveness affects overall manufacturer performance through listing constraints.

Research implications: Identifying levers such as innovativeness that assist manufacturers in fostering their power over retailers provides a new mode for understanding how manufacturers can influence the balance of power between manufacturers and retailers. The study provides support for the approach/inhibition theory of power on the inter-organizational level. Organizations with increased power are assumed to have approach-related tendencies and act in goal-consistent manner, whereas organizations with reduced power are assumed to develop the tendency to pursue inhibition-related actions, e.g., attending to threats. Furthermore, this study identifies channel relationship characteristics such as retailer dependency as a mediating path between manufacturer innovativeness and performance.

Practical implications: Managers need to strengthen the firm’s innovative capacity to enhance the performance of their companies. By developing the capability to provide radical innovations, manufacturers are able to enhance their performance not only directly but also indirectly by strengthening the manufacturer’s position with regard to retailers. This study underscores the relevance of innovativeness for strengthening the manufacturer’s position in its relationship with retailers that avoids problems with aggressive store brands and constrained listing conditions.

Originality/value/contribution: This study proposes manufacturer innovativeness as a managerial lever to shift the power balance between manufacturers and retailers.     

品牌权益影响下的双渠道供应链定价决策及协调研究

针对一个制造商开通直销渠道销售产品与零售商的价格竞争问题,文章基于制造商与零售商共享品牌权益的视角,研究在制造商双渠道供应链结构中,价格和品牌权益同时作用下的双渠道供应链定价决策,分别分析在集中决策下和分散决策下,品牌权益对两种渠道价格和利润的影响。研究发现：在集中决策下,两种渠道的价格、利润与品牌权益成正相关;在分散决策下,当品牌权益超过一定临界值时,其对制造商直销渠道的价格和制造商总利润的影响大于零售商。鉴于品牌权益对供应链定价决策的重要影响,文章建立制造商和零售商之间的品牌权益成本共担机制,并通过数值仿真分析发现,当实施品牌权益成本共担机制时,制造商和零售商的销售价格和利润均是最优的。因此,零售商应加强与制造商的互动,共同创造高品牌权益的同时,也应共同分享高品牌权益。     

The Impact of Brand Delisting on Store Switching and Brand Switching Intentions

A tool retailers often use to improve their negotiating position with brand manufacturers is to delist - or threaten to delist - the manufacturers’ brand. Because brand manufacturers rely mainly on retailers to sell their products to consumers, a brand delisting will cause a sales loss for the brand manufacturer. Therefore, many brand manufacturers feel enormous pressure to give in and improve buying conditions to favor the retailer. The question thus emerges: Can a brand manufacturer resist a retailer's threat to delist its brand(s)? If a brand delisting severely hurts retail sales, it is easier for a brand manufacturer to resist. The authors study the impact of brand delistings on store switching and brand switching using a controlled online experiment and in-store shopper survey. They develop and test a conceptual model with several antecedents of consumers’ reactions to a brand delisting and conclude that brand equity, market share, and the products’ hedonic level drive store and brand switching.     

Empirical investigation of channel reactions to brand introductions

We investigate how incumbent manufacturers and retailers alter their pricing behavior in response to new product introduction. In performing our analysis, we need to be cognizant of the fact that the observed price changes can be due to entry-induced changes in a) demand conditions or b) costs or, on the other hand, to the competitive behavior of c) manufacturers and/or d) the retailer. In order to separate these four changes, we posit that manufacturer and retailer pricing is an outcome of maximizing a combination of shares and profits. This enhanced objective function allows us to measure competitive conduct benchmarked as less or more competitive than under the Bertrand-Nash framework. Our empirical analysis is based on the toothpaste category for the time period January 1993–February 1995. During this period, there were three brand introductions in two rounds of entry. Using the estimates from the demand and the supply model, we compute the changes in the retail and wholesale prices that are attributable to changes in demand conditions, manufacturer and retailer competitive conduct, and cost changes. These results support our conjecture that inferring the change in conduct solely based on a change in observed prices is likely to be erroneous. For the first new brand entry, we find that the brand introduction did not significantly increase competition between manufacturers. As a result, the balance of channel power between the manufacturers and the retailers remained unaltered. Both retailer and manufacturer profit margins increased after the first entry. However, subsequent to the second entry, retailer share of channel profits increased at the expense of the manufacturers; manufacturers even saw a decline in their absolute profit margins. We believe that this research will provide insight for manufacturers and retailers regarding how the various channel participants are likely to react to new product introduction. Furthermore, policymakers interested in understanding competitive reactions to new product introduction should find this research useful.     

Incorporating balance of power in channel decision structure: Theory and empirical application

The objective of a manufacturer is to maximize the profits of its brands. The retailer, on the other hand, is not interested in the profitability of any particular brand but concentrates on the overall category profit. In spite of these apparently diverging profit objectives, both manufacturers and retailers are increasingly realizing that profit margins for both may be increased when retailers and manufacturers recognize the strengths of each other and utilize them to maximize the overall category profit. We develop a game theoretic model to demonstrate that when the retailer allows a few large manufacturers to practice independent brand management but manages the rest of the brands, the category profit is indeed higher than the profits generated when it allows independent brand management by all manufacturers or acts as an uncompromising category manager. We also provide an empirical application of our model on scanner data.     

Analyzing the effects of private-label supplier disclosure on retailer image

Private-label retailers' disclosures of dual manufacturing agreements—that is, agreements with manufacturers that produce both their own national brands and private labels—can affect the images associated with the retailers. In this study, an experiment reveals moderating effects on retailer images, according to the images of both the national brand manufacturers and the retailers; and also depending on the brand equity of the private label. A low-image retailer's disclosure that a national brand manufacturer supplies its private label causes consumers to perceive that the retailer has a higher image. However, the positive effects of private label supplier disclosure on the retailer's image are weaker when the private label enjoys high equity.     

Relational Resources in Interorganizational Exchange: The Effects of Trade Equity and Brand Equity

This research examines the effects of two key relational resources in relationships between retailers and national brand manufacturers. We introduce the new concept of trade equity, defined here as the value that accrues to a firm from being known in a trading network as a trustworthy trading partner, to explore the relational resources that are inherent in a firm’s ties with trading partners. We consider brand equity to represent relational resources that are located in a firm’s relational ties with end consumers. Based on data collected in a survey of 797 home appliance retailers, results show that a manufacturer’s trade equity and brand equity have differential effects on the retailer’s dependence and commitment to the manufacturer. Findings show that a manufacturer’s brand equity strengthens the effect of its trade equity on the retailer’s dependence and weakens the effect on the retailer’s commitment.     

自有品牌对连锁商业品牌战略的影响分析

零售商实施品牌战略是制造商和零售商之间垂直竞争加剧的产物,也是应对零售商之间水平竞争的需要.零售商品牌战略包括企业品牌和商品及服务品牌两个层次.作为零售商商品品牌的重要内容,自有品牌通过企业品牌和制造商品牌两个路径对零售企业的品牌战略产生影响.为保证品牌战略的有效实施,零售企业必须处理好业态选择、品类管理、品牌策略的管理等.     

Retailers’ Price Positioning and the Motivational Profiling of Store‐Brand Shoppers: The Case of Spain

In recent years, retailers have worked to advance store‐brand strategies, leading to greater success and higher congruence with the retailer's positioning. In this new competitive context, this research aims to characterize store‐brand shoppers in terms of motivation and benefits sought, as well as analyze, on the basis of congruence theory, the moderating role of a retailer's price positioning on store‐brand shopper characterizations. The empirical study combines survey and household panel information related to leading retailers in Spain; the findings reveal that store‐brand shoppers are motivated by their price sensitivity, whereas they are less sensitive to service quality and name brands. However, the retailer's price positioning exerts a moderating effect on shopper profiles: In less price‐oriented retail chains, store‐brand purchases seem motivated less by price and more by quality, brand awareness, and brand reputation.     

THE IMPACT OF ORDER FULFILLMENT SERVICE ON RETAILER MERCHANDISING DECISIONS IN THE CONSUMER DURABLES INDUSTRY

Historically, manufacturers held the upper hand in consumer goods supply chain relationships. There has been a pervasive shift of power to retailers over the past 20 years, however, ushering in an era of waning consumer loyalty to manufacturers' brands and increasing loyalty to retailers. While there is extensive research focusing on the manufacturer‐consumer relationship, retailers' increased ability to influence consumer purchases suggests that manufacturers should understand not only consumer perceptions of delivery service, but also retailer perceptions. We incorporate social network theory to examine the manufacturer‐retailer‐consumer linkages in the consumer durables industry, with the emphasis on the retailer in the role of the “broker” (Burt 1992). Specifically, we examine whether retailer perceptions of a manufacturer's order fulfillment service (OFS) positively impacts retailer perceptions of the manufacturer's brand, the importance of the product, and the likelihood of the retailers' salespeople to recommend the product to consumers. The research bridges OFS and retailer purchase behavior in a consumer durables industry characterized by high levels of consumer involvement, brand presence, and personal selling.     

Capturing Retailers’ Brand and Customer Focus

This article uses information from two data sources, Compustat and Nexis Uni, and textual analysis to measure and validate the brand focus and customer focus of 109 U.S. listed retailers. The results from an analysis of their 853 earnings calls in 2010 and 2018 outline that on average, both foci increased over time. Although both foci vary substantially, brand focus varies more widely across retailers than their customer focus. Both foci are independent of each other. Specialty retailers have the highest brand focus, and internet & direct marketing retailers have the highest customer focus. A positive correlation exists between a retailer’s customer focus and its profitability, but not between a retailer’s brand focus and its profitability. The authors use the results to generate a research agenda that can direct future research in further systematically exploring firms’ brand and customer focus.     

A Positive Theory of Private Label: A Strategic Role of Private Label in a Duopoly National-Brand Market

This article offers an economic rationale for national brands to provide private labels to their retailers. We build a game-theoretic model that analyzes the interactions among two national brand manufacturers and one common retailer. In an interesting strategic role, the private label mitigates the promotion competition between the two national brands and provides benefits for all three members in the channel. Our analysis shows that offering a private label can be a credible commitment from a national brand manufacturer that it will not engage in promotions and decrease the incentive of the national brand rival to engage in promotions. In this way, we attempt to provide a reason for why national brand manufacturers provide retailers with private labels in practice. In addition, we discuss the optimal quality level of private labels.     

通道费的生产及其对生产商利润影响——基于品牌价值视角的研究

通道费的收取引起了渠道冲突和零供关系紧张,“效率促进论”和“市场势力论”两大阵营从自己的领域进行了研究,但对于通道费对生产商利润影响没有一致的结论。文章尝试从品牌价值的视角重新研究通道费的生产,解释了通道费的存在基础--零售商市场势力及其来源,并在此基础上研究了零售商品牌价值对零售数量和生产商利润的影响,最后通过我国制造业的数据说明通道费没有降低生产商利润的结论,这一研究不但具有理论研究的重要意义,更具有指导政策方向的现实价值。     

Status of Database Marketing in the Dutch Fast Moving Consumer Goods Industry

Brand manufacturers in the fast moving consumer goods industry are under pressure. Due to increased retailer concentration, access to scanner technology, eroding brand loyalty, an increasing number of price promotions and increasing market share of private labels, power is more and more shifting towards retailers. DBM can be an alternative for brand manufacturers in building brands and gaining more knowledge about the customer. In this paper data of 91 Dutch brand manufacturers are used to find the factors that influence the adoption of database marketing (DBM). A distinction between tactical DBM and strategic DBM is made. Tactical DBM has a short-term focus and a transactional approach. Strategic DBM has a long term focus aiming at enhancing brand loyalty, brand awareness and brand associations. Our results show that DBM is relatively undeveloped in the Dutch FMCG-industry. 29% of all respondents adopted DBM. When it is used, it is mainly used tactically. It is also found that DBM adoption is influenced by top management support, the size of the brand portfolio and the adoption of DBM by a competitor.     

The Retailer's Perspective on the Link Between Logistical Resources and Perceived Customer Loyalty to Manufacturer Brands

The objective of this study was to investigate the relationships between logistics and brand‐related resources, and assess their impact on the retailer's perceptions of customer loyalty to manufacturer brands. On the basis of theoretical underpinnings of the resource‐based view, this study explores the relationships among four main variables: (1) variety of collaborative logistics technologies shared between retailers and manufacturers, (2) manufacturer's logistics operations quality provided to retailers, (3) retailer's brand differentiation orientation, and (4) retailer's perceptions of customers loyalty to manufacturer brands. An online survey was conducted on 313 senior marketing and supply chain managers from retailer firms. The results of the structural equation analysis support a mediated relationship between logistical resources and perceived loyalty to manufacturer brands. The retailers believe that shared logistics technologies enable manufacturers and retailers to offer higher levels of availability and visibility of preferred brands to their end‐user customers. In turn, the end‐users become more confident with their decisions to repurchase the same brand offerings.     

Manufacturers' brand advertising and how it influences manufacturers' and retailers' margins

This article describes the effects of manufacturers' brand advertising on the costs, margins and prices of firms in a real-life, 'dual-stage' world where manufacturers sell to retailers who resell to consumers. Unlike 'single-stage' models, which are frequently used by economists, in which manufacturers appear to sell directly to consumers or to deal with them through an inert distribution system, retailers in a dual-stage world neither buy nor sell as perfect competitors. Although in some industry structures advertising will raise prices to consumers, the welfare effects of advertising are far more benign in a dual-stage world. In intensively advertised categories consumers are more disposed to switch stores within brand than brands within store (just the opposite of relationships in categories where brand franchises are weak) causing there to be an inverse association between margins at the two stages. Thus, while intensive advertising will normally raise factory prices it will drive down retailer margins, often to the point that retail prices are below the levels that would be obtained if the industry were only lightly advertised.     

Brand management in small and medium-sized (SME) retailers: A future research agenda

Abstract

Recently, an emerging body of literature has advocated the importance of branding to small and medium-sized (SME) retailers. Nonetheless, this discourse has ignored the complexities and idiosyncrasies of retail branding. The aim of this paper is to provide a new theoretical understanding of brand management by SME retailers. In order to achieve this aim, the paper integrates the brand management, SME branding, and retail branding literature, and offers a conceptual framework for SME retail branding. A number of propositions are included that aid understanding of brand management in SME retail organisations. It is anticipated that these propositions will help shape future empirical research in this area. Further in-depth research into the application of branding within the SME retail context would address a significant gap in academic knowledge. In doing so, it would also provide important insights for management practice.     

Manufacturer and retailer perceptions of in‐store promotions in South Africa

The objective of this article was to investigate the perceptions of retailers and manufacturers with regard to in‐store promotions A literature review of in‐store promotions was undertaken in the context of channel conflict between manufacturers and retailers In this study, the perceptions of a sample of 133 manufacturers and 144 retailers in South Africa were measured Perceptions of these two groups were obtained about the promotional activities conducted, promotion objectives, price and non‐price promotions and the effectiveness and evaluation methods for promotions The results indicate that there are differences between the two groups, with the retailers being the dominant group Also there is a lack of sound measurement of in‐store promotion Implications for manufacturers are discussed     

A framework for SME retail branding

Abstract

It has become increasingly important for small to medium sized enterprise (SME) retailers to stand out in the current marketplace. Branding in SMEs is a growing area of academic interest, although the majority of studies have been based in the manufacturing sector. This study seeks to develop a framework of the characteristics, processes and dynamics of SME retailers. A qualitative research study was carried out with SME owner managers (OMs) over a period of 15 months. The findings extend the understanding of branding in SMEs in a number of ways. Firstly, it is found that SME retailers take a cautious approach to brand management, seeking to build loyalty, networks and relationships. Secondly, the holistic nature of SME retail branding presents a challenge to OMs who are resource-constrained. Thirdly, the soft, colloquial and intuitive approaches to brand equity appraisal are evident. Brand marketing is focused on word of mouth, which has implications for how OMs operationalise the brand around store experiences. Finally, the influence of the OM on branding decisions is clear. The key findings are discussed in relation to the retail context of the study, the centricity of the OMs in SME branding and entrepreneurial brand management.