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The role of store brand positioning for appropriating supply chain profit under shelf space allocation

Kuo, Chia-Wei and Yang, Shu-Jung Sunny (2013) 'The role of store brand positioning for appropriating supply chain profit under shelf space allocation.' European Journal of Operational Research, 231 (1). pp. 88-97. ISSN 0377-2217

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Abstract

We consider a retailer’s decision of developing a store brand (SB) version of a national brand (NB) and the role that its positioning strategy plays in appropriating the supply chain profit. Since the business of the retailer can be regarded as selling to NB manufacturers the shelf space at its disposal, we formulate a game-theoretical model of a single-retailer, single-manufacturer supply chain, where the retailer can decide whether to launch its own SB product and sells scarce shelf-space to a competing NB in a consumer good category. As a result, the most likely equilibrium outcome is that the available selling amount of each brand is constrained by the shelf-space available for its products and both brands coexist in the category. In this paper, we conceptualize the SB positioning that involves both product quality and product features. Our analysis shows that when the NB cross-price effect is not too large, the retailer should position its SB’s quality closer to the NB, more emphasize its SB’s differences in features facing a weaker NB, and less emphasize its SB’s differences in features facing a stronger NB. Our results stress the importance of SB positioning under the shelf-space allocation, in order to maximize the retailer’s value appropriation across the supply chain.

Item Type: Article
Uncontrolled Keywords: Private label positioning; Shelf space management; Supply chain management; Marketing-operations interface; Competitive strategy; Game theory
Subjects: H Social Sciences > HF Commerce
Divisions: Faculty of Social Sciences > Essex Business School
Depositing User: Jim Jamieson
Date Deposited: 31 Aug 2013 09:41
Last Modified: 16 Dec 2014 11:14
URI: http://repository.essex.ac.uk/id/eprint/7496

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