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Why should firms manufacture retailer brands?


  • David Morris
  • John Nightingale


For firms manufacturing convenience goods there are three branding policies available, a proprietory brand policy, a retailer brand policy and a mixed brand policy. A firm's choice depends on differences in demand and promotion costs between the proprietory and retailer brand markets. This can be analysed using a simple elaboration of the standard 3rd degree price discrimination model. But if the two markets are not independent over the long-term there may be other consequences of following the optimization rules of the model. If retailers develop consumers' preference for their own shops and their own brands, the demand advantage enjoyed by manufacturers' brands may be reduced further. The more willing are manufacturers to supply retailer brands, the more retailers win undermine the demand for manufacturers' proprietory brands.

Suggested Citation

  • David Morris & John Nightingale, 1980. "Why should firms manufacture retailer brands?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 1(3), pages 132-137, September.
  • Handle: RePEc:wly:mgtdec:v:1:y:1980:i:3:p:132-137

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    Cited by:

    1. Abhishek, 2011. "Private Label Brand Choice Dynamics Logit model involving demographic and psychographic variables," IIMA Working Papers WP2011-01-07, Indian Institute of Management Ahmedabad, Research and Publication Department.

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