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Brand strategies: Enhancing manufacturers' bargaining power in grocery retail through cross‐category complementarities

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  • Ulrich Heimeshoff
  • Gordon J. Klein

Abstract

The article emphasizes the role of brand strategies, as placement in regional niche strategies for manufacturers, to impact retailer–manufacturer relations in the grocery retail sector. Due to joint purchases of initially unrelated products within a shopping cart, transaction cost‐induced complementarities between those products arise. Given unique retailer data, we infer complementarities arising from a specific product to a shopping cart of products. Using a Nash‐in‐Nash framework, we are able to show that the impact on the bargaining position for the manufacturer vis‐à‐vis a retailer is substantial and helps to increase the potential of gaining a larger slice of the profit pie.

Suggested Citation

  • Ulrich Heimeshoff & Gordon J. Klein, 2024. "Brand strategies: Enhancing manufacturers' bargaining power in grocery retail through cross‐category complementarities," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 45(4), pages 2484-2500, June.
    • Handle: RePEc:wly:mgtdec:v:45:y:2024:i:4:p:2484-2500
    DOI: 10.1002/mde.4137
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