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A new era in retail: Private-label production by national-brand manufacturers and premium-quality private labels

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  • Braak, A.M. ter

    (Tilburg University)

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    Abstract

    Private labels have witnessed considerable growth in grocery retailing. While existing academic studies have provided valuable insights concerning the evolution of private labels, several issues remain largely unexplored. First, in the face of these large private-label volumes, private-label production opportunities arise. Due to increased private-label competition, national-brand manufacturers increasingly pursue a dual-branding strategy and engage in private-label production next to their national-brand activities. In chapter two of this dissertation, a major motivation for national-brand manufacturers to engage in private-label production, namely whether it creates retailer goodwill, is investigated. It shows that private-label production is indeed rewarded: national-brand manufacturers involved in private-label production for a discounter have a higher likelihood of obtaining national-brand shelf presence at that discounter. The third chapter focuses on one of the main reasons why retailers push private labels, i.e. because they generate high margins, and considers how a retailer’s private-label margins vary within categories. It demonstrates that a retailer’s private-label margins depend on the nature of the private-label supplier-retailer relationship, that they differ across quality tiers and package sizes, and that they are affected by a supplier’s extent of national-brand focus next to its private-label production for the retailer. Finally, this dissertation concentrates on the recent premium private-label trend. Even though premium private labels are seen as “one of the hottest trends in retailing,” retailers are selective in picking their battles with top-quality national brands and do not feel the need to extend their standard private label with a premium private label in every category. The fourth chapter provides insight into why retailers offer premium private labels in some categories, but not in others. The research presented in this dissertation is among the first to empirically investigate the phenomenon of private-label production, and to shed light on the recent trend of premium private labels.

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    Bibliographic Info

    Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-5242207.

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    Length: 134
    Date of creation: 2012
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    Publication status: Published
    Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-5242207

    Note: Dissertation
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    Web page: http://www.tilburguniversity.edu/

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    References

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    1. Jean-Pierre Dubé & Sachin Gupta, 2008. "Cross-Brand Pass-Through in Supermarket Pricing," Marketing Science, INFORMS, INFORMS, vol. 27(3), pages 324-333, 05-06.
    2. Anthony J. Dukes & Tansev Geylani & Kannan Srinivasan, 2009. "Strategic Assortment Reduction by a Dominant Retailer," Marketing Science, INFORMS, INFORMS, vol. 28(2), pages 309-319, 03-04.
    3. Sanjay K. Dhar & Stephen J. Hoch, 1997. "Why Store Brand Penetration Varies by Retailer," Marketing Science, INFORMS, INFORMS, vol. 16(3), pages 208-227.
    4. Vincent Nijs & Kanishka Misra & Eric T. Anderson & Karsten Hansen & Lakshman Krishnamurthi, 2010. "Channel Pass-Through of Trade Promotions," Marketing Science, INFORMS, INFORMS, vol. 29(2), pages 250-267, 03-04.
    5. Bronnenberg, B.J.J.A.M. & Wathieu, L., 1996. "Asymmetric Promotion Effects and Brand Positioning," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-339978, Tilburg University.
    6. Bart J. Bronnenberg & Luc Wathieu, 1996. "Asymmetric Promotion Effects and Brand Positioning," Marketing Science, INFORMS, INFORMS, vol. 15(4), pages 379-394.
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