Processes and outcomes of distributor brand new product development

Abstract

PurposeMost new product development (NPD) studies focus on manufacturer brands; few consider distributor brands. The purpose of this paper to investigate whether NPD processes and outcomes differ between manufacturers and distributors.Design/methodology/approachInterviews within the grocery industry in Norway and analysis of sales numbers from an AC Nielsen ScanTrack database illustrate that through different NPD processes manufacturers and distributors reach different outcomes.FindingsDistributors differ from manufacturers in the NPD process in several ways: more in‐store interaction resulting in very market‐driven products. They usually outsource technical development, and launch brands with substantially less market communication through fewer marketing channels. Distributors, who mostly develop copycat products of large volume manufacturer brands, have lower failure rates. More surprisingly, the paper reveals that distributor brands achieve faster growth in market share than manufacturer brands when brand concentration is low, and some low volume distributor brands have a higher average retail price than manufacturer brands, indicating that different private label categories exist.Research limitations/implicationsThe sample has only three product categories (pizza, juice, and jam). Replication with other categories in other industries would help validate the results. The distributor NPD process and outcomes are still not well understood, and as distributors move into more value‐added products it will evolve, requiring further research.Originality/valueThis is one of the first empirical investigations of differences in NPD processes and outcomes between manufacturer and distributor brands. It also shows the effect of brand concentration on distributor brand growth.