Bridge,Focus, Attack,or Stimulate: Retail Category Management Strategies with a Store Brand

We investigate a monopolist retailer's category management strategy where the main strategic decisions are how to horizontally position a store brand relative to the incumbent national brands and how to price the store and national brands for retail category profit maximization. We analyze a market composed of two consumer segments with differing tastes and heterogeneity with respect to willingness to pay and a product category consisting of two competing national brands and one store brand. We find that contrary to the existing literature, it is not always optimal for a retailer to position its store brand against the leading national brand; instead there are many situations where it is best to position the store brand close to the weaker national brand or to position it in the “middle” so it appeals to both national brands' target segments. In the process we identify four distinct category management strategies that a retailer can use with a store brand. In three of these the optimal store brand price is the brand's monopoly price, while in the remaining one strategy the price is lower. We also suggest an easy to implement means for a retailer to determine which strategy is best to use, depending on the particular competitive environment present before the introduction of the store brand and the relative quality of the store brand. We find that the store brand entry is most beneficial to the retailer when the national brands are moderately differentiated. Finally we show that introducing a store brand not only allows the retailer to garner a higher share of the channel profits through higher retail margins, but also often provides the retailer the benefit of increases in national brand unit sales as well as incremental sales from the store brand. JEL Classification: M310     

Differentiation via the marketing mix

In this paper we investigate the conjecture that increasing marketing mix specialization enhances firm performance. We start by identifying two dimensions of specialization — absolute (concentration of expenditures) and relative to competition (distinctiveness). We then propose underlying mechanisms that lead to effects of marketing mix specialization on firm performance. Using these guidelines we specify an empirical model that relates marketing mix specialization to firm performance. We estimate this model using PIMS data and find support for our propositions.The authors gratefully acknowledge the Isle Maligne Fund at the Fuqua School of Business, the Strategic Planning Institute, and the Wharton PIMS Research Center for their research support; and thank Jim Bettman, Kevin Keller, Debu Purohit, and Rick Staelin for their helpful comments.     

设计、商机、新动力——2009香港创新科技及设计博览会印象

创新是品牌的灵魂。全方位,多元化的创新科技及设计方案,从环保节能,产品设计,形象识别．广告构思,到品牌管理,一年一度的2009香港创新科技及设计博览会（HKTDC INNO DESIGN TECH EXPO 2009）集中展示了各类创新科技和设计方案。     

Impact of the level of aggregation on response accuracy in surveys of behavioral frequency

Through observations of AT&T data and the results of two of our own studies, we discovered interesting asymmetrical effects of the level of aggregation of the question on the response accuracy in surveys of behavioral frequency. We find that disaggregating a question to a lower, less comfortable level of aggregation creates greater uncertainty, leading to larger absolute errors in survey responses. However, if a question is asked at a higher less comfortable level, the majority of respondents escape by splitting questions down to the natural level, thereby avoiding greater uncertainty and thus responding more accurately. We argue that for greater accuracy in surveys, one should identify the natural level of aggregation at which a question should be posed. But when in doubt, it is better to ask a question at a higher level of aggregation because of possible escapability downward.     

Effect of Store Brand Introduction on Channel Price Leadership: An Empirical Investigation

In this study, we conduct an empirical investigation of the impact of store brand introductions on the price leadership relations in a distribution channel between a retailer and national brand manufacturers. We analyze a multi-product category retail database from a major grocery chain, which captures both a period before and a period after the introduction of a store brand in each product category. By applying the time series approach to this data set, we show that store brand introductions frequently lead to price leadership changes, generally in a more favorable direction for the retailer than for the national brand manufacturer, evidenced by either the decay of the manufacturers’ price leadership or the rise of the retailer’s price leadership. However, such a change is not universal but tends to be concentrated among a certain quality tier of national brands, which is not always the low-tier, but sometimes the top-tier despite the low-price low-quality position of the store brand. The patterns detected in the data suggest that these changes are likely to reflect the retailer’s strategic effort to reshape the price leadership environment in a product category aided by the enhanced bargaining power and managerial sophistication that accompanied the store brand introductions.     

Survey Accuracy as a Function of Usage Rate

Using a large-scale AT&T database, we decompose usage levels into frequency and duration, and then investigate how they affect survey response accuracy. Results show that more accurate surveys are obtained from those in the high frequency group (possibly because of the increased use of the more accurate rate-based method of recall and higher degrees of regularity), and from those in the longer duration group (possibly because of increased involvement). We therefore suggest that the survey method is less suited for light users because of higher error, and that alternative methods such as diaries might be more appropriate. We also found similarly consistent results with respect to self-perception of usage rate and the accuracy of survey recall.