The Strategic Positioning of Store Brands in Retailer–Manufacturer Negotiations

Store brands are the only brands for which the retailer is responsible not onlyfor promotion, shelf placement, and pricing, but also for positioning the brandin product space. We argue that retailers strongly value control over store brandpositioning because they will be unable to source a national brand with theirdesired product positioning. This is because retailers have an incentive to positionstore brands as close substitutes to leading national brands – a location in productspace which other national brand manufacturers would not find profitable. We presentempirical evidence that is consistent with the results of our model.