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Store Vs. National Brands: A Product Line Mix Puzzle

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Author Info

  • José J. Sempere Monerris

    ()
    (Universitat de València)

  • Rafael Moner Colonques

    ()
    (Universitat de València)

  • Amparo Urbano

    (Universitat de València)

Abstract

This paper examines retailers' strategic decisions about store brand introduction when each retailer can stock a limited number of brands. The different product line mix equilibria depend on demand parameters that measure the cross-effect across national and store brands and the cross-effect within each brand type, thus leading to a simple testable implication. Store brand introduction is determined by the combination of the three effects that result from replacing a national brand by a store brand; the direct effect, the exclusivity effect and the in-store effect. Interestingly enough, we identify conditions under which similar retailers take different decisions concerning their product line mix.

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File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2007-10.pdf
File Function: Fisrt version / Primera version, 2007
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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2007-10.

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Length: 44 pages
Date of creation: Apr 2007
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2007-10

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Keywords: store brands; retail duopoly; product line mix;

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  1. Narasimhan, Chakravarthi & Wilcox, Ronald T, 1998. "Private Labels and the Channel Relationship: A Cross-Category Analysis," The Journal of Business, University of Chicago Press, vol. 71(4), pages 573-600, October.
  2. Jagmohan S. Raju & Raj Sethuraman & Sanjay K. Dhar, 1995. "The Introduction and Performance of Store Brands," Management Science, INFORMS, vol. 41(6), pages 957-978, June.
  3. Ronald Cotterill & William Putsis, 2000. "Market Share and Price Setting Behavior for Private Labels and National Brands," Review of Industrial Organization, Springer, vol. 17(1), pages 17-39, August.
  4. Philippe Bontems & Sylvette Monier-Dilhan & Vincent Réquillart, 1999. "Strategic effects of private labels," Working Papers 162412, Institut National de la Recherche Agronomique, France.
  5. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-28, Fall.
  6. Gabrielsen, Tommy Staahl & Sørgard, Lars, 2000. "Private Labels, Price Rivalry, and Public Policy," University of California at Santa Barbara, Economics Working Paper Series qt8wh900ks, Department of Economics, UC Santa Barbara.
  7. Michael B. Ward & Jay P. Shimshack & Jeffrey M. Perloff & J. Michael Harris, 2002. "Effects of the Private-Label Invasion in Food Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 961-973.
  8. Mills, David E, 1999. "Private Labels and Manufacturer Counterstrategies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(2), pages 125-45, June.
  9. Vrinda Kadiyali & Pradeep Chintagunta & Naufel Vilcassim, 2000. "Manufacturer-Retailer Channel Interactions and Implications for Channel Power: An Empirical Investigation of Pricing in a Local Market," Marketing Science, INFORMS, vol. 19(2), pages 127-148, September.
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