Abstract

With the emergence of more private brands launched by retail chains, Taiwanese national brand manufacturers face a strategic dilemma of whether they should produce competing private brands. Past research offers tactics of how national brands compete with private brands, but little investigation probes why they manufacture the products for retailers. This study examines the manufacturers’ strategic motives that lead to their contract manufacturing for private labels. Twenty-five expert samples were selected from Taiwan food companies which have been involved in contract manufacturing for private labels. The results of the Analytic Hierarchy Process (AHP) and Monte Carlo Simulation showed that Taiwanese national brand manufacturers primarily harbor economics motives most for the apportionment of production cost and profit increase. The empirical evidence offers both retailers and brand manufacturers useful implications for mutually developing a private label strategy.

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