IDEAS home Printed from https://ideas.repec.org/a/eee/ejores/v268y2018i2p555-568.html
   My bibliography  Save this article

Brand positioning and consumer taste information

Author

Listed:
  • Nalca, Arcan
  • Boyaci, Tamer
  • Ray, Saibal

Abstract

In this paper, we study how a retailer can benefit from acquiring consumer taste information in the presence of competition between the retailers store brand (SB) and a manufacturers national brand (NB). In our model, there is ex-ante uncertainty about consumer preferences for distinct product features, and the retailer has an advantage in resolving this uncertainty because of his close proximity to consumers. Our focus is on the impact of the retailers information acquisition and disclosure strategy on the positioning of the brands. Our analysis reveals that acquiring taste information allows the retailer to make better SB positioning decisions. Information disclosure, however, enables the manufacturer to make better NB positioning decisions – which in return may benefit or hurt the retailer. For instance, if a particular product feature is quite popular, then it is beneficial for the retailer to incorporate that feature into the SB, and inform the manufacturer so that the NB also includes this feature. Information sharing, in these circumstances, benefits both the retailer and the manufacturer, even though it increases the intensity of competition between the brands. But, there are situations in which the retailer refrains from information sharing so that a potentially poor positioning decision by the NB makes the SB the only provider of the popular feature. The retailer always benefits from acquiring information. However, it is beneficial to the manufacturer only if the retailer does not introduce an SB due to the associated high fixed.

Suggested Citation

  • Nalca, Arcan & Boyaci, Tamer & Ray, Saibal, 2018. "Brand positioning and consumer taste information," European Journal of Operational Research, Elsevier, vol. 268(2), pages 555-568.
  • Handle: RePEc:eee:ejores:v:268:y:2018:i:2:p:555-568
    DOI: 10.1016/j.ejor.2018.01.058
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0377221718300948
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.ejor.2018.01.058?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhao, Xiande & Xie, Jinxing & Leung, Janny, 2002. "The impact of forecasting model selection on the value of information sharing in a supply chain," European Journal of Operational Research, Elsevier, vol. 142(2), pages 321-344, October.
    2. Liang Guo & Tian Li & Hongtao Zhang, 2014. "Strategic Information Sharing in Competing Channels," Production and Operations Management, Production and Operations Management Society, vol. 23(10), pages 1719-1731, October.
    3. Liang Guo & Ganesh Iyer, 2010. "Information Acquisition and Sharing in a Vertical Relationship," Marketing Science, INFORMS, vol. 29(3), pages 483-506, 05-06.
    4. Gérard P. Cachon & Martin A. Lariviere, 2001. "Contracting to Assure Supply: How to Share Demand Forecasts in a Supply Chain," Management Science, INFORMS, vol. 47(5), pages 629-646, May.
    5. Soberman, David A. & Parker, Philip M., 2004. "Private labels: psychological versioning of typical consumer products," International Journal of Industrial Organization, Elsevier, vol. 22(6), pages 849-861, June.
    6. Esther Gal-Or & Tansev Geylani & Anthony J. Dukes, 2008. "Information Sharing in a Channel with Partially Informed Retailers," Marketing Science, INFORMS, vol. 27(4), pages 642-658, 07-08.
    7. Sergio Meza & K. Sudhir, 2010. "Do private labels increase retailer bargaining power?," Quantitative Marketing and Economics (QME), Springer, vol. 8(3), pages 333-363, September.
    8. Yue, Xiaohang & Liu, John, 2006. "Demand forecast sharing in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 174(1), pages 646-667, October.
    9. Hau L. Lee & Kut C. So & Christopher S. Tang, 2000. "The Value of Information Sharing in a Two-Level Supply Chain," Management Science, INFORMS, vol. 46(5), pages 626-643, May.
    10. Rex Du & Eunkyu Lee & Richard Staelin, 2005. "Bridge, Focus, Attack, or Stimulate: Retail Category Management Strategies with a Store Brand," Quantitative Marketing and Economics (QME), Springer, vol. 3(4), pages 393-418, December.
    11. Fangruo Chen, 1998. "Echelon Reorder Points, Installation Reorder Points, and the Value of Centralized Demand Information," Management Science, INFORMS, vol. 44(12-Part-2), pages 221-234, December.
    12. Liang Guo, 2009. "The Benefits of Downstream Information Acquisition," Marketing Science, INFORMS, vol. 28(3), pages 457-471, 05-06.
    13. Özalp Özer, 2003. "Replenishment Strategies for Distribution Systems Under Advance Demand Information," Management Science, INFORMS, vol. 49(3), pages 255-272, March.
    14. Kieron Meagher & Klaus Zauner, 2005. "Location-then-price competition with uncertain consumer tastes," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 25(4), pages 799-818, June.
    15. Amrouche, Nawel & Zaccour, Georges, 2007. "Shelf-space allocation of national and private brands," European Journal of Operational Research, Elsevier, vol. 180(2), pages 648-663, July.
    16. Gérard P. Cachon & Marshall Fisher, 2000. "Supply Chain Inventory Management and the Value of Shared Information," Management Science, INFORMS, vol. 46(8), pages 1032-1048, August.
    17. Bonein, Aurélie & Turolla, Stéphane, 2009. "Sequential location under one-sided demand uncertainty," Research in Economics, Elsevier, vol. 63(3), pages 145-159, September.
    18. Eyal Biyalogorsky & Oded Koenigsberg, 2010. "Ownership coordination in a channel: Incentives, returns, and negotiations," Quantitative Marketing and Economics (QME), Springer, vol. 8(4), pages 461-490, December.
    19. Preyas S. Desai, 2001. "Quality Segmentation in Spatial Markets: When Does Cannibalization Affect Product Line Design?," Marketing Science, INFORMS, vol. 20(3), pages 265-283, August.
    20. Özalp Özer & Wei Wei, 2006. "Strategic Commitments for an Optimal Capacity Decision Under Asymmetric Forecast Information," Management Science, INFORMS, vol. 52(8), pages 1238-1257, August.
    21. Raj Sethuraman, 2009. "Assessing the External Validity of Analytical Results from National Brand and Store Brand Competition Models," Marketing Science, INFORMS, vol. 28(4), pages 759-781, 07-08.
    22. Groznik, Ana & Heese, H. Sebastian, 2010. "Supply chain interactions due to store-brand introductions: The impact of retail competition," European Journal of Operational Research, Elsevier, vol. 203(3), pages 575-582, June.
    23. 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.
    24. Hau L. Lee & V. Padmanabhan & Seungjin Whang, 2004. "Comments on "Information Distortion in a Supply Chain: The Bullwhip Effect"," Management Science, INFORMS, vol. 50(12_supple), pages 1887-1893, December.
    25. Mills, David E, 1995. "Why Retailers Sell Private Labels," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 4(3), pages 509-528, Fall.
    26. Fiona Scott Morton & Florian Zettelmeyer, 2004. "The Strategic Positioning of Store Brands in Retailer--Manufacturer Negotiations," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 24(2), pages 161-194, March.
    27. Srinagesh Gavirneni & Roman Kapuscinski & Sridhar Tayur, 1999. "Value of Information in Capacitated Supply Chains," Management Science, INFORMS, vol. 45(1), pages 16-24, January.
    28. Subramanian Balachander & Kannan Srinivasan, 1998. "Modifying Customer Expectations of Price Decreases for a Durable Product," Management Science, INFORMS, vol. 44(6), pages 776-786, June.
    29. Sachon, Marc & Martinez de Albeniz, Victor, 2009. "Private label introduction: Does it benefit the supply chain?," IESE Research Papers D/832, IESE Business School.
    30. Serdar Sayman & Stephen J. Hoch & Jagmohan S. Raju, 2002. "Positioning of Store Brands," Marketing Science, INFORMS, vol. 21(4), pages 378-397, June.
    31. I Horowitz, 2000. "An option-pricing look at the introduction of private labels," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(2), pages 221-230, February.
    32. Hau L. Lee & V. Padmanabhan & Seungjin Whang, 2004. "Information Distortion in a Supply Chain: The Bullwhip Effect," Management Science, INFORMS, vol. 50(12_supple), pages 1875-1886, December.
    33. Sanjay K. Dhar & Stephen J. Hoch, 1997. "Why Store Brand Penetration Varies by Retailer," Marketing Science, INFORMS, vol. 16(3), pages 208-227.
    34. Guangwen Kong & Sampath Rajagopalan & Hao Zhang, 2013. "Revenue Sharing and Information Leakage in a Supply Chain," Management Science, INFORMS, vol. 59(3), pages 556-572, November.
    35. Krol Michal, 2011. "On the Existence and Social Optimality of Equilibria in a Hotelling Game with Uncertain Demand and Linear-Quadratic Costs," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 11(1), pages 1-22, March.
    36. Thonemann, U. W., 2002. "Improving supply-chain performance by sharing advance demand information," European Journal of Operational Research, Elsevier, vol. 142(1), pages 81-107, October.
    37. Bikram Ghosh & Subramanian Balachander, 2007. "Research Note--Competitive Bundling and Counterbundling with Generalist and Specialist Firms," Management Science, INFORMS, vol. 53(1), pages 159-168, January.
    38. Gerben van der Panne & Cees van Beers & Alfred Kleinknecht, 2003. "Success and Failure of Innovation: A Literature Review," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 309-338.
    39. Chu, Wai Hung Julius & Lee, Ching Chyi, 2006. "Strategic information sharing in a supply chain," European Journal of Operational Research, Elsevier, vol. 174(3), pages 1567-1579, November.
    40. Kurata, Hisashi & Yao, Dong-Qing & Liu, John J., 2007. "Pricing policies under direct vs. indirect channel competition and national vs. store brand competition," European Journal of Operational Research, Elsevier, vol. 180(1), pages 262-281, July.
    41. Kusum Ailawadi & Eric Bradlow & Michaela Draganska & Vincent Nijs & Robert Rooderkerk & K. Sudhir & Kenneth Wilbur & Jie Zhang, 2010. "Empirical models of manufacturer-retailer interaction: A review and agenda for future research," Marketing Letters, Springer, vol. 21(3), pages 273-285, September.
    42. Xia, Yusen & Gilbert, Stephen M., 2007. "Strategic interactions between channel structure and demand enhancing services," European Journal of Operational Research, Elsevier, vol. 181(1), pages 252-265, August.
    43. Mark B. Vandenbosch & Charles B. Weinberg, 1995. "Product and Price Competition in a Two-Dimensional Vertical Differentiation Model," Marketing Science, INFORMS, vol. 14(2), pages 224-249.
    44. Özalp Özer & Yanchong Zheng & Kay-Yut Chen, 2011. "Trust in Forecast Information Sharing," Management Science, INFORMS, vol. 57(6), pages 1111-1137, June.
    45. Özalp Özer & Yanchong Zheng & Yufei Ren, 2014. "Trust, Trustworthiness, and Information Sharing in Supply Chains Bridging China and the United States," Management Science, INFORMS, vol. 60(10), pages 2435-2460, October.
    46. Albert Y. Ha & Shilu Tong, 2008. "Contracting and Information Sharing Under Supply Chain Competition," Management Science, INFORMS, vol. 54(4), pages 701-715, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhang, Qiao & Chen, Jing & Zaccour, Georges, 2020. "Market targeting and information sharing with social influences in a luxury supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 133(C).
    2. Huang, Zongsheng & Feng, Ting, 2020. "Money-back guarantee and pricing decision with retailer's store brand," Journal of Retailing and Consumer Services, Elsevier, vol. 52(C).
    3. Burger, Katharina & White, Leroy & Yearworth, Mike, 2019. "Developing a smart operational research with hybrid practice theories," European Journal of Operational Research, Elsevier, vol. 277(3), pages 1137-1150.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Arcan Nalca, & Tamer Boyaci, & Saibal Ray, 2017. "Brand positioning and consumer taste information," ESMT Research Working Papers ESMT-17-01_R1, ESMT European School of Management and Technology, revised 04 Dec 2017.
    2. Arcan Nalca, & Tamer Boyaci, & Saibal Ray, 2017. "Consumer taste uncertainty in the context of store brand and national brand competition," ESMT Research Working Papers ESMT-17-01, ESMT European School of Management and Technology.
    3. Li, Tian & Zhang, Hongtao, 2015. "Information sharing in a supply chain with a make-to-stock manufacturer," Omega, Elsevier, vol. 50(C), pages 115-125.
    4. Wu, Lifang & Yang, Wei & Wu, Jessica, 2021. "Private label management: A literature review," Journal of Business Research, Elsevier, vol. 125(C), pages 368-384.
    5. Rong Luo, 2018. "Store brands and retail grocery competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(4), pages 653-668, October.
    6. Weimin Ma & Rong Cheng & Hua Ke, 2018. "Impacts of Power Structure on Supply Chain with a Store Brand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(04), pages 1-25, August.
    7. Avinadav, Tal & Chernonog, Tatyana & Ben-Zvi, Tal, 2019. "The effect of information superiority on a supply chain of virtual products," International Journal of Production Economics, Elsevier, vol. 216(C), pages 384-397.
    8. Leon Yang Chu & Noam Shamir & Hyoduk Shin, 2017. "Strategic Communication for Capacity Alignment with Pricing in a Supply Chain," Management Science, INFORMS, vol. 63(12), pages 4366-4377, December.
    9. Noam Shamir & Hyoduk Shin, 2016. "Public Forecast Information Sharing in a Market with Competing Supply Chains," Management Science, INFORMS, vol. 62(10), pages 2994-3022, October.
    10. Cheng, Rong & Duan, Yongrui & Zhang, Jianguang & Ke, Hua, 2021. "Impacts of store-brand introduction on a multiple-echelon supply chain," European Journal of Operational Research, Elsevier, vol. 292(2), pages 652-662.
    11. Wu, Junjian & Wang, Haiyan & Shang, Jennifer, 2019. "Multi-sourcing and information sharing under competition and supply uncertainty," European Journal of Operational Research, Elsevier, vol. 278(2), pages 658-671.
    12. Ting Zhang & Xiaowei Zhu & Qinglong Gou, 2017. "Demand Forecasting and Pricing Decision with the Entry of Store Brand under Various Information Sharing Scenarios," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 34(02), pages 1-26, April.
    13. Sherif Nasser & Danko Turcic & Chakravarthi Narasimhan, 2013. "National Brand's Response to Store Brands: Throw In the Towel or Fight Back?," Marketing Science, INFORMS, vol. 32(4), pages 591-608, July.
    14. Hara, Reiya & Matsubayashi, Nobuo, 2017. "Premium store brand: Product development collaboration between retailers and national brand manufacturers," International Journal of Production Economics, Elsevier, vol. 185(C), pages 128-138.
    15. Yasin Alan & Mümin Kurtuluş & Chunlin Wang, 2019. "The Role of Store Brand Spillover in a Retailer’s Category Management Strategy," Manufacturing & Service Operations Management, INFORMS, vol. 21(3), pages 620-635, July.
    16. Oded Berman & Mohammad M. Fazel-Zarandi & Dmitry Krass, 2019. "Truthful Cheap Talk: Why Operational Flexibility May Lead to Truthful Communication," Management Science, INFORMS, vol. 65(4), pages 1624-1641, April.
    17. Amrouche, Nawel & Yan, Ruiliang, 2015. "Aggressive or partnership strategy: Which choice is better for the national brand?," International Journal of Production Economics, Elsevier, vol. 166(C), pages 50-63.
    18. Paul W. Dobson & Ratula Chakraborty, 2014. "How Do National Brands And Store Brands Compete?," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2014-07, Centre for Competition Policy, University of East Anglia, Norwich, UK..
    19. Noam Shamir, 2017. "Cartel Formation Through Strategic Information Leakage in a Distribution Channel," Marketing Science, INFORMS, vol. 36(1), pages 70-88, January.
    20. Ji-Hung Choi & Taewan Kim & Sang-Uk Jung, 2018. "Sustainable Decision Making for Store Brand Product," Sustainability, MDPI, Open Access Journal, vol. 10(11), pages 1-14, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ejores:v:268:y:2018:i:2:p:555-568. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/eor .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/eor .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.