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Who Benefits from Store Brand Entry?

  • Koen Pauwels


    (Assistant Professor, Tuck School of Business at Dartmouth, Hanover, New Hampshire 03755)

  • Shuba Srinivasan


    (Assistant Professor, The A. Gary Anderson School of Management, University of California, Riverside, California 92521)

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    Store brand entry has become a key issue in marketing as it may structurally change the performance of and the interactions among all market players. Based on their multivariate time-series analysis, the authors demonstrate permanent performance effects of store brand entry, typically benefiting the retailer, the consumers, and premium-brand manufacturers, while harming second-tier brand manufacturers. For the , they consistently find two of store brand entry: . This increase in unit margins implies that the retailer strengthens its bargaining position vis-à-vis national brand manufacturers. However, store brand entry only rarely yields category expansion and does not create store traffic or revenue benefits. Second, do not obtain lower prices on all national brands, only on some second-tier brands. However, they benefit from enlarged product assortment and intensified promotional activity that lowers average price paid for two out of four categories. For the , store brand entry is typically beneficial for national brands, but not for national brands. Often, premium brands experience lower long-term price sensitivity and higher revenues, whereas second-tier brands experience higher long-term price sensitivity and lower revenues.

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    Article provided by INFORMS in its journal Marketing Science.

    Volume (Year): 23 (2004)
    Issue (Month): 3 (July)
    Pages: 364-390

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    Handle: RePEc:inm:ormksc:v:23:y:2004:i:3:p:364-390
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