Consumer Response to Retailer-Supplier Brand Exclusivity Arrangements

Abstract

Product assortment is one of the most important factors within retail strategy and number of brands offered is a key dimension. Retailers face the challenge balancing assortments that are large enough to attract and satisfy consumers, while also being efficient and profitable. Brand exclusivity arrangements within mass retailers are a developing phenomenon in the marketplace. Consumer reaction to these arrangements is not well understood by retailers, nor are they studied in the literature. This study examines the impact brand exclusivity arrangements and their context may have on customer satisfaction. A field experiment finds that the negative consumer response to imposed brand exclusivity is significantly larger than that associated with the mere reduction in the number of brands.