Private labels and manufacturer counterstrategies

Private labels and manufacturer counterstrategies Private label marketing is a device retailers use to appropriate some of the profits latent in the vertical structures they share with manufacturers of well-known brands. This paper explores several counterstrategies used by manufacturers to blunt the force of retailers' private label programmes so that manufacturers can appropriate some of those latent profits themselves. Among the counterstrategies examined are measures to widen the quality gap between the manufacturer's brand and the private label substitute, introducing 'fighting brands' to displace private labels on retailers' shelves, various nonlinear pricing measures, and coupon programmes. Some of these measures work better than others in terms of increasing the manufacturer's profit and stemming the diversion of profits to the retailer. Any measure that increases the manufacturer's profits also improves the overall performance of the market. Key words http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Review of Agricultural Economics Oxford University Press

Private labels and manufacturer counterstrategies

European Review of Agricultural Economics, Volume 26 (2) – Jun 1, 1999

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Publisher
Oxford University Press
Copyright
Copyright © 2015 Oxford University Press and the Foundation of the European Review of Agricultural Economics
ISSN
0165-1587
eISSN
1464-3618
D.O.I.
10.1093/erae/26.2.125
Publisher site
See Article on Publisher Site

Abstract

Private label marketing is a device retailers use to appropriate some of the profits latent in the vertical structures they share with manufacturers of well-known brands. This paper explores several counterstrategies used by manufacturers to blunt the force of retailers' private label programmes so that manufacturers can appropriate some of those latent profits themselves. Among the counterstrategies examined are measures to widen the quality gap between the manufacturer's brand and the private label substitute, introducing 'fighting brands' to displace private labels on retailers' shelves, various nonlinear pricing measures, and coupon programmes. Some of these measures work better than others in terms of increasing the manufacturer's profit and stemming the diversion of profits to the retailer. Any measure that increases the manufacturer's profits also improves the overall performance of the market. Key words

Journal

European Review of Agricultural EconomicsOxford University Press

Published: Jun 1, 1999

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