National Brand Manufacturers Research Articles

Sourcing store brand from the national brand manufacturer or the outside contract manufacturer: Roles of different logistics modes of national brand

Sourcing store brand from the national brand manufacturer or the outside contract manufacturer: Roles of different logistics modes of national brand

Live streaming channel and product assortment with both national and store brand products

To counteract the fierce competition in the online retailing market, retailers are increasingly adopting live streaming selling model and introducing store brand product to enhance their competitiveness. In this context, we attempt to examine whether and when a retailer should launch a live streaming channel. If launched, we further investigate how the retailer should assort both national and store brand products across available channels. To delve into these questions, we consider a supply chain consisting of a manufacturer and an online retailer, where the retailer resells the manufacturer's national brand product and also sells a store brand product. We examine the retailer's optimal channel strategy and product assortment strategy by considering six scenarios, differentiated by whether introducing the live streaming channel and various product assortment tactics. Our findings indicate that as long as the fixed setup cost of the live channel is relatively low, the retailer will always introduce a live streaming channel. The retailer's optimal assortment of both products across channels highly depends on the consumers’ additional value derived from the live streaming channel and the perceived quality of the store brand product. We also find that, the retailer's optimal channel strategy and product assortment may not always benefit the manufacturer, but there exist conditions that can create win-win situations for both players. Our study further shows that if the retailer launches the live streaming channel at the start, it may not always be necessary to introduce the store brand product under certain conditions.

Store brand entry with asymmetric cost information

This study conducts a research on the dominated-retailer’s establishment strategy of a store brand in a supply chain, in which the retailer possesses private knowledge of the store brand’s product cost, while the manufacturer is only informed about the distribution of this cost information. The store brand entry with asymmetric information initiates a signaling game between the chain members. Through comparing equilibrium outcomes, we find that the pooling equilibrium consistently prevails as the dominant equilibrium, suggesting that the informed retailer is reluctant to reveal the cost information to her national brand cooperative manufacturer. We also explore the influence of a retailer’s store brand entry on the national-brand manufacturer’s performance. The findings reveal that, with asymmetric cost information, mutually beneficial outcomes for all parties involved can be achieved by the establishment of a store brand. Furthermore, we delve into how the asymmetric cost information affects the performance of the chain members. Surprisingly, our findings demonstrate that asymmetric cost information may be desirable not only for retailer, but also for the less informed manufacturer under specific circumstances. This suggests the possibility of supply chain members reaching a mutual agreement on the structure of asymmetric cost information.

Interaction between service investment and store-brand introduction in a dual-channel supply chain

This study examines service investment decisions in the context of two store brand introduction modes and the mode selection of a retailer. The research focuses on a supply chain comprised of a national brand manufacturer (NBM), an external store brand supplier (SBS), and a retailer. A national brand product (NB) is distributed to the market through both direct and retail channels. The retailer consistently offers service efforts within the retail channel and has two options for launching a store brand product (SB): producing the SB or procuring it from an external source. The findings indicate that, when the retailer has a low fixed cost and a substantial market size for one-stop consumers, the retailer internally producing its own SB is more profitable. However, when the market size for one-stop consumers and the fixed cost of producing the SB are both low, or when the retailer possesses a relatively high fixed cost, it is advisable for the retailer to procure a lower-quality SB from the SBS. Alternatively, the retailer could establish its own production facilities to launch a higher-quality SB. Furthermore, it is noteworthy that the NBM consistently favors the retailer outsourcing the SB production to an external SBS. This implies that both the NBM and the retailer can achieve a “win-win” outcome when the retailer procures the SB.

Agency, reselling, or hybrid mode? Competing with store brand

Platform supply chains are emerging as a new form of global supply chain that encompass reselling, agency selling, and hybrid selling modes. This paper examines the impact of store brand products on the firms’ sales strategies. We consider the selection between three sales modes available to suppliers, both with and without the store brand products: reselling, agency selling, and hybrid selling. Comparing the firms’ optimal strategies shows that the hybrid mode consistently yields greater profits when compared to the agency selling mode. Notably, our findings reveal that firms’ optimal choice of sales mode varies depending on the commission rate. The optimal sales mode differs when the commission rate is lower or higher. In the presence of the store brand products, firms choose the reselling mode only when the commission rate is high and consumers’ perceived value of national brand products is low. Otherwise, equilibrium outcomes are not achieved.

Information and selling mode strategies in a supply chain with an outsourced private label product

AbstractThis paper examines the interplay between the information strategy of an e‐commerce platform and the selling mode strategy of a manufacturer within a co‐opetitive supply chain, as well as the identification of the optimal supply chain strategy. We develop a supply chain model where a platform outsources production of its private label product to a manufacturer, who also sells its national brand product through the platform. The platform must decide whether to acquire consumer quality preference information at a cost and share it with the manufacturer, while the manufacturer needs to choose between the reselling mode or the agency selling mode for its national brand product. The two driving effects (competition‐intensification effect and mode differentiation effect) are identified. Our findings show that the platform will acquire and share information when the acquisition cost is sufficiently low, leading to the “competition‐intensification effect.” Additionally, the manufacturer prefers the agency selling mode when cost‐quality efficiency is low, and the reselling mode otherwise, driven by the “mode differentiation effect.” In cases where information sharing is absent, the manufacturer is more likely to choose the agency selling mode. Interestingly, when the cost‐quality efficiency of the manufacturer's product is moderate and the information acquisition cost is low, the “competition‐intensification effect” and the “mode differentiation effect” offset each other, resulting in the expansion of the region where the manufacturer chooses the reselling mode due to the platform's information‐sharing strategy. As a result, this enhances a cooperative relationship between the manufacturer and the platform. We also derive the optimal supply chain strategy, providing insights into both the manufacturer's selling mode and the platform's information strategies in online retailing.

What is holding private label back in the United States and in emerging markets?

Private labels (PL), also known as store brands or private brands, account for hundreds of billions of dollars in consumer packaged goods sales every year. PLs build store loyalty, improve margins and have been a key factor in changing the balance of power between retailers and national brand (NB) manufacturers. Thus, retailers around the world have a stake in pushing their own store brands. Yet, while PLs enjoy great success in Western, and increasingly Central, Europe, their performance is much more muted in the world's largest market, the United States, and in emerging markets. Why is that the case? This thought piece provides a number of ideas, summarized in propositions that can be tested in future research.

Dual Branding by National Brand Manufacturers: Drivers and Outcomes

This article is the first generalizable empirical analysis of dual branding, that is, the supply of private labels (PLs) by national brand (NB) manufacturers. The authors compile a unique data set combining the identity of PL suppliers in over 260 packaged goods categories with multiple years of scanner data in the Spanish grocery market to offer several contributions. First, they provide new descriptive insights on the prevalence of dual branding in categories where the manufacturer does and does not have NBs, the longevity of PL supply arrangements, and the differences in PL sourcing across retailers. Second, they integrate the literature on motivators and dissuaders of dual branding and test the impact of relevant manufacturer, retailer, and dyad characteristics on PL supply in NB and non-NB categories. The results reveal a more nuanced empirical reality than is evident from prior research regarding the role of multicategory scope, fighter brands, NB differentiation, and size and positioning of the retailer's PL. Third, they examine the outcomes of PL supply for the NBs of dual branders and find that starting (terminating) PL supply to a retailer significantly benefits (hurts) the relative distribution depth but not the relative share of the dual brander's NBs at that retailer.

How does blockchain technology implementation affect the supply chain members' strategic decisions under the factory encroachment?

PurposeContract Manufacturers (CM, factory) can cultivate factory brand products by imitating Original Equipment Manufacturers' (OEM, brand owner) National Brand products, and compete with OEM through the online retailer, that is, factory encroachment. In practice, few consumers can identify the quality of those two products in the online market. Implementing blockchain technology (BTI) can help all consumers identify product quality but may change the operation decisions and incur implementation costs. This study aims to explore how will the BTI strategies affect participants' operation performance under the factory encroachment and delve into the decisions regarding NB product quality and CM encroachment.Design/methodology/approachThis study constructs a three-level outsourcing supply chain comprising one contract manufacturer (CM, factory), one original equipment manufacturer (OEM) and one online retailer. By utilizing the Stackelberg game, the authors first compared the results between two strategic decisions of BTI and no-BTI by online retailers under the factory encroachment scenario. Then, the NB product quality decision and the CM's encroachment decision are also investigated.FindingsBTI strategy can benefit all participants (triple win), which both occurs in exogenous and endogenous quality cases, and the triple win area will expand (shrink) as the BTI cost decreases (increases). In addition, the OEM will improve product quality to confront competition from the CM, and the OEM may not always benefit from the BTI, it depends on the maturity of the market. Interestingly, BTI could improve the consumer surplus when the proportion of novice consumers is low. Finally, this study also investigates the extended case that CM always encroaches into the market whether the online retailer choose BTI or not, which hurts OEM's profit and decreases the product quality.Originality/valueThis study sheds light on the strategic decisions of online retailers' BTI regarding supply chain members' profits, consumer surplus and social welfare under factory encroachment. It also demonstrates that the BTI strategy, under different quality decisions (endogenous and exogenous), can be more profitable for chain members and consumers.

Private brand introduction and selling mode decision when considering risk aversion

PurposeThis paper aims to study the interplay between a risk-averse national brand manufacturer's (NBM) selling mode decision and a risk-neutral e-platform's private brand (PB) introduction decision.Design/methodology/approachA game theory model is used to solve selling mode decision, that is whether transform the selling mode from the wholesale mode to the marketplace mode, and PB introduction decision, that is, whether introduce the PB.FindingsThe results show that for the NBM, under certain condition, the NBM's selling mode decision is not affected by the e-platform's PB introduction decision. High revenue-sharing rate is conducive only when the difference in consumer preference between the PB and the national brand (NB) is small. The NBM's risk aversion will improve the applicability of the marketplace mode. For the e-platform, high PB preference of consumers and risk-averse behavior of the NBM is not conducive to PB introduction. For the supply chain, scenarios that the NB monopolizes the market under the wholesale mode and PB introduction under the marketplace mode should be prevented. PB introduction under the wholesale mode will become the only equilibrium with the increase of risk aversion of the NBM. Finally, the authors extend the scenario that consumers prefer the PB and the e-platform is risk-averse enterprise and find that PB introduction under the wholesale mode is detrimental to the NBM but beneficial to the supply chain. The impact of consumers' PB preference on the e-platform's PB introduction is opposite to the basic model. The impact of the e-platform's risk aversion on game equilibrium is opposite to that of the NBM's risk aversion.Originality/valueThis paper is first to study selling mode decision and PB introduction decision when considering enterprises' risk-averse attitude.

Manufacturer's sales format selection and information sharing strategy of platform with a private brand

PurposeIn recent years, private brands for e-commerce platforms have experienced rapid growth. However, whether these platforms developing private brands should share their demand information with others and how such information sharing affects the sales format selection of national brand manufacturers have puzzled firm managers in practice. This paper aims to investigate the information-sharing strategy for the e-commerce platform and its influence on the sales format selection in the presence of the private brand.Design/methodology/approachThe authors use a game-theoretical model to examine the interaction between the information-sharing strategy and sales format selection in a supply chain consisting of a manufacturer and a platform that operates a private brand.FindingsThe equilibrium results show that when the commission rate is low, the manufacturer favors agency selling, and the platform shares demand information with the manufacturer; when the commission rate is high, the manufacturer prefers reselling, and the platform does not share the information. This preference is affected by information forecasting accuracy; as the information forecasting accuracy increases, the manufacturer prefers to adopt agency selling, and the platform tends to share the information. Interestingly, under agency selling, sharing information with the manufacturer can increase the platform’s profit from selling the private brand and achieve a win-win situation for them. Furthermore, we show that the manufacturer can inspire the platform to share the information with himself by adopting agency selling, whereas the platform sharing the information improves the probability that the manufacturer adopts agency selling. Moreover, the manufacturer may have a first-mover advantage. In particular, the manufacturer moving first increases the likelihood that the manufacturer chooses agency selling and the platform shares the information.Originality/valueThis paper contributes to sales format literature by exploring the effect of information sharing strategy on sales format selection in the presence of the private brand and can help manufacturers and platforms to make suitable decisions regarding information sharing and sales format selection.

The strategic interaction between business mode and store brand introduction in a platform-based supply chain

The phenomenon of store brands introduced by large-scale platforms is becoming common, and manufacturers should carefully choose the business mode of selling national brand (NB) products via platforms. Considering big-data marketing, we examine the sales mode selection in a platform-based supply chain based on the strategic interaction between the business mode decision and store brand decision. By continuous dynamic game theory, the strategies and performance under different modes are solved. We find that given the store brand (SB) decision, the business mode adopted by the manufacturer depends only on the commission rate, which is high for reselling and low for agency selling. Given the business mode, under reselling, whether the platform introduces SB depends only on the brand preference, i.e., SB is introduced when the preference for NB is low. While under agency, he introduces SB in the general or relatively passive situation, depending both on the commission rate and the brand preference. In addition, four equilibrium sales modes are obtained based on the strategic interaction. In order to achieve a win-win-win situation in profitability among the manufacturer, the platform and the platform-based supply chain, the manufacturer should adopt agency selling and the platform forgoes introducing SB when both the commission rates and NB preference are low.

C2M strategies on an e-commerce platform under brand competition

With the growing diversity of consumer preferences, an emerging mode of supply chain innovation, the consumer-to-manufacturer (C2M) model, is being adopted by e-commerce platforms. The C2M model directly connects end consumers to upstream factories digitally, shortens the information pipeline, and helps factories better understand consumer needs. Given the presence in the market of a national brand produced by a manufacturer, whether to incur the costs of introducing C2M store brand products is a key issue for the platform. Specifically, we consider two C2M modes that depend on whether the e-commerce platform has pricing power: (1) TC2M, which involves the factory selling to consumers directly, and (2) JC2M, which involves the e-commerce platform reselling the C2M product. We show that a relatively high mismatch level of the national brand product and a low introduction cost might induce adoption of the C2M model, which is in the interest of both the e-commerce platform and the factory. Furthermore, when the national brand’s mismatch level is not too high, the e-commerce platform prefers the JC2M mode to alleviate intensified brand competition. Interestingly, under certain circumstances, the C2M model can also be beneficial for the national brand producer (i.e., manufacturer) due to more precise targeting of its market segment. Our study extends the literature by modeling the competition between the national brand and C2M store brand, discussing supply chain members’ preference for the C2M model and providing intriguing managerial insights for the platform on the adoption of different C2M modes.

Optimal Contract Design for a National Brand Manufacturer Under Store Brand Private Information

Problem definition: We study an optimal contract design problem for a national brand (NB) manufacturer, which sells her product via a retailer. The retailer may introduce his store brand (SB) with private cost information. The manufacturer estimates that the retailer’s SB cost may be high or low with certain probabilities and offers a menu of two-part tariff contracts to screen the retailer’s cost information. Methodology/results: Following the mechanism design theory, we formulate the problem as a two-stage screening game to analyze the strategic interaction between the two players under asymmetric information. Despite the complexity resulting from type-dependent reservation profit of the retailer, we derive the NB manufacturer’s optimal contracts analytically. We prove that there exists a unique threshold such that when the NB cost is below the threshold, the manufacturer offers both types of retailers incentive-compatible contracts; when the NB cost is above the threshold, the manufacturer offers a menu of contracts to shut down the low-type retailer and engage the high-type retailer only. Managerial implications: We find that when the NB product becomes more competitive (i.e., a higher quality or a lower cost), both the NB manufacturer and the retailer are better off. This result implies that under asymmetric information, the retailer has incentive to enhance the NB product quality or reduce its cost. Additionally, the private information is valuable to both members only when a contract without shutdown is offered. Moreover, such information is more valuable to both players when the NB product becomes more competitive. However, when SB quality improves or when SB cost decreases, the value of information may increase or decrease to both supply chain members. Finally, we derive a surprising result that under asymmetric information, the expected consumer surplus may increase because of a lower SB quality or a higher low-type SB cost. Funding: G. Xiao acknowledges financial support from the Research Grants Council of Hong Kong [General Research Fund Grant PolyU 15505621]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2021.0187 .

National brand manufacturers’ supply strategy in the presence of retailers’ store-branded lookalike packaging and consumer confusion about quality preference

Supplying store brands (SBs) to retailers is a strategic decision for national brand (NB) manufacturers in response to the prevalence of retailers introducing SBs. This study proposes a game-theoretical model to examine the manufacturer’s supply strategy when facing the retailer’s store-branded product, which could have lookalike packaging that confuses consumers about their quality preferences regarding the SB and NB. We find that the manufacturer will supply an SB product to the retailer when the unit production cost of supply is low or the unit production-in-house cost is high, which induces the retailer to choose lookalike packaging when both the NB’s unit price of quality and production-in-house cost are low. Consumer confusion may bring a win–win situation for the manufacturer and retailer, which stimulates the manufacturer to lower the incentive to supply. In addition, the proportion of confused consumers brings a non-monotone effect on the profitability of the retailer and manufacturer. Extending the main model to the cases: (1) the consumer confusion from just being about the SB to being about both products; (2) the SB quality is endogenized; (3) the manufacturer can decide whether to accept the lookalike packaging; (4) the quality of SB exceeds NB, we find that the retailer’s decision of lookalike packaging and the manufacturer’s strategy of supply offering remain qualitatively unchanged, and our results are robust. These findings provide theoretical predictions and useful insights regarding the impacts of consumer confusion derived from lookalike packaging in a two-echelon supply chain.

Store-brand product variety and price decisions under showrooming

We study a brick-and-mortar (BM) retailer competing with an online retailer in an experience goods market where a national-brand product is sold through both retailers. Consumers exhibit showrooming by visiting the BM retailer to experience the product and may switch to purchasing from the online retailer. We explore how the BM retailer counters showrooming by introducing a store brand and providing product variety through customization, in considerations of consumer heterogeneities in shopping inconvenience and product taste with asymmetric taste sensitivities towards product brands. We find that the BM retailer prefers to increase store-brand product variety when the national brand has less brand advantage, product customization is less costly, or its operational efficiency is higher. However, the BM retailer’s price decision may not be in sync with its store-brand product variety decision. Interestingly, only when the national brand has less brand advantage will the BM retailer’s store-brand strategy exhibit double-edged effects on showrooming: less (more) showrooming from consumers who have low taste-mismatch costs for store-brand (national-brand) products. Furthermore, although store-brand introduction inevitably cannibalizes national brand sales, this cannibalization effect does not necessarily curtail the BM retailer’s national brand sales due to its interplay with showrooming.

The Impact of Platform Encroachment on the Manufacturer’s Financing Strategy

Manufacturers with limited funds often seek financial help from outside, usually banks or platforms. However, introducing store brand products (platform encroachment) makes platforms form a competitive and cooperative relationship with manufacturers. To investigate how platform encroachment affects the optimal production decisions and the manufacturer’s financing strategy, this paper establishes a stylized model to capture the strategic interaction between a manufacturer, a platform and a bank. The manufacturer sells a national brand product directly through the platform, which owns a competitive store brand product. By analyzing the equilibrium results, we show that although platform encroachment may reduce the manufacturer’s financing cost, product competition always makes the manufacturer bear more losses. In addition, our results also show that the manufacturer is always willing to adopt the platform financing strategy if the platform does not encroach. However, under platform encroachment, the bank financing strategy may be a better choice for the manufacturer, as long as the commission rate is low enough. Moreover, the platform financing strategy is the Pareto-dominant strategy when the commission rate is high. Finally, we verify the accuracy and robustness of the conclusions of the basic model through numerical analysis and extension. Using the results we derive, we explain the market practices and provide valuable guidelines for manufacturers to choose financing strategies under platform encroachment.

Dynamic coopetition game between private label and national brand under carbon trading policy

The increasing environmental concerns have changed the coopetition behavior between private-label (PL) retailers and national-brand (NB) manufacturers, which needs firms to reconsider their competitive and cooperative strategies to cope with this change. To address this need, we incorporate carbon trading policy into dynamic coopetition game models between a PL retailer and an NB manufacturer. We examine their dynamic evolution trajectories of state variables, decision variables, and profit value functions by using numerical simulation. The sensitivity analysis shows that: (i) some key parameters affect the steady-state values of variables and profit value functions; (ii) the relative strengths of the NB manufacturer and the PL retailer affect decision variables and profit value functions. The results indicate that the carbon trading policy significantly affects dynamic coopetition between the PL retailer and the NB manufacturer.

Information sharing and production timing strategy in a platform‐based supply chain

AbstractThe e‐commerce platform has been adopting the agency mode to sell the products of the national brand manufacturer (NBM) while introducing its own store brand and obtaining the consumer's preference information (CPI) to reinforce the competitiveness of the store‐brand products. This paper investigates the platform's decisions on whether to share the CPI with the NBM and its impact on the production timing decisions of the platform and the NBM. The results show that the platform may benefit from CPI sharing which may also change the equilibrium production timing of the platform and the NBM from sequential decision to simultaneous decision. In addition, the equilibria of the joint decision between the CPI sharing and the production timing are obtained, which is related to the market acceptance uncertainties of the products and the competitiveness of the national brands.

Analysis on the influence of retailer's introduction of store brand under manufacturer's product line strategy

<p style='text-indent:20px;'>As the introduction of store brand (SB) by retailers becomes more common, national brand manufacturers (NBM) in the market often respond with a product line strategy. Then how should retailers decide their product lines under the situation that NBM adopt product line strategy? Under the manufacturer's product line strategy, this paper compares and analyzes three competitive strategies for retailers to introduce high-end SB, low-end SB and SB product line. The results show that: First, no matter what kind of competition strategy the retailer adopts, (1) the introduction of SB occupies the market share of NB; (2) the retailer gains the highest unit income from the high-end products of NB manufacturers. Second, the relationship between production cost and encroachment effects directly affects the retailer's choice of optimal competitive strategy and the manufacturer's preference for its competitive strategy choice. Finally, from the perspective of profit maximization, the optimal choice for retailers is the product line competition strategy, but this strategy is not obvious compared with the high-end competition strategy. Therefore, when retailers introduce product lines, if they are effectively threatened by national brand manufacturers (for example, NBM refuses to provide national brands to retailers), retailers may choose the suboptimal strategy, that is, to introduce store brand high-end products. When the high-end products of store brands are better than the low-end products of national brands and the production cost of products is relatively high, this strategy just meets the expectations of national brand manufacturers for retailers to introduce strategies.</p>