Store Brand Quality Research Articles

Impact of green technology improvement and store brand introduction on the sales mode selection

With the growing environmental awareness and the introduction of store brands in online platforms, product competition between the manufacturer and e-tailer is fierce. The impact of store brand development on manufacturer and retailer profits is widely debated. In this study, we attempt to clarify the competitive dynamics between the manufacturer and e-tailer by examining the interaction between store brands and green technology in different sales modes. We find that high store brand quality does not always attract the e-tailer to introduce the store brand. This phenomenon occurs because higher store brand quality triggers greater green technology improvement. Although agency selling can mitigate the double marginalization of the national brand, it increases the difficulty for the store brand to enter the market. Interestingly, while the manufacturer and e-tailer have opposite preferences for sales modes, both the manufacturer and e-tailer prefer reselling when the percentage fee is moderate. In particular, this tendency of the manufacturer increases with the improvement of green technology. Finally, from the perspective of environmental performance, sales quantity and green technology improvement are crucial influencing factors. In most cases, reselling produces less environmental pollution. Our results reconcile some discrepancies between theory and practice on the supply chain impact of green technology and store brand interactions.

How does Store Branded Lookalike Packaging Affect Competition in a Dyadic Supply Chain: A Consumer Confusion Perspective

Store branded lookalike packaging resembling national brand product (NB) packaging creates confusion for consumers who are uncertain about their quality preference of the store brand product (SB). This paper presents a model for exploring the NB manufacturer’s wholesale price decision, and the response of the SB retailer, considering consumer confusion. Consumers differ in their quality preferences for products and are classified into two groups: deliberate and confused, depending on whether they have precise quality preferences of the SB. We find that when facing a hybrid structure of consumers, the retailer will introduce the SB only when the quality preference difference between high- and low-end consumers is moderate. When the SB is offered, the retailer may not always benefit from targeting low-end consumers with the SB only; a mixed strategy by attracting low-end (high-end) consumers to the national (store) brand product can bring higher profit. Examining the effect of consumer confusion, we find that it may bring a win-win, lose-lose, or win-lose situation for the manufacturer and retailer, depending on the quality preference difference and proportion of high-end consumers. We then consider the case when being deliberate is a choice of the consumer, finding that the retailer will induce consumers to be deliberate only when the store brand quality is low. Consumer confusion will always create a win-win outcome for the manufacturer and retailer when (1) SB quality is higher than NB quality, (2) SB quality is endogenized, or (3) consumers are confused about their quality preference for both the NB and SB. The consumer surplus may be enhanced or weakened, depending on the retailer’s market segmentation strategy. Our results reconcile some discrepancies between theoretical predictions and empirical findings regarding the impacts of consumer confusion about the SB derived from lookalike packaging on a two-echelon supply chain, and our insights are robust.

Optimizing Store‐Brand Quality: Impact of Choice of Producer and Channel Price Leadership

There is a vast literature on optimizing store brand quality, but it does not address the individual and joint effects of sourcing and pricing power; this is the focus of our paper. We study a retailer’s store‐brand quality‐positioning problem under three sourcing structures and two types of price leadership. The three sources are in‐house (IH), a leading national‐brand manufacturer (NBM) with a competing product, and a strategic third‐party manufacturer (3M). We consider two forms of price leadership, Manufacturer‐Stackelberg (MS) and Retailer‐Stackelberg (RS). We fully characterize the retailer’s optimal quality levels and their relative values across the six scenarios, as well as equilibrium prices, retail profits, consumer welfare, and supply chain profits. Among other things, we find that the retailer chooses lower quality when sourcing from NBM than from other sources to benefit from quality differentiation as there are few other points of leverage. On the other hand, she chooses a higher quality when sourcing from 3M vs. producing IH because, despite the double marginalization, a higher‐quality store brand induces greater competition between 3M and NBM, which benefits the retailer. We also show that the power to decide the source is more important to the retailer than having pricing power.

Online market entry and channel sharing strategy with direct selling diseconomies in the sharing economy era

Channel sharing is an important marketing strategy for giant retailers who sell their own store brands and resell national brands for cooperative manufacturers simultaneously. To expand their market and increase profitability, national brand manufacturers may consider entering the online market through direct selling. To counter such threats, retailers may adopt a channel sharing strategy on whether to terminate the national brand product-reselling business. We analyze three scenarios, namely, the base scenario (the retailer sells both brands), the dual channel scenario (the manufacturer enters the online market while the retailer sells both brands), and the termination scenario (each firm sells their own brand because of the retailer's termination of the reselling business) to investigate the strategic interactions between the retailer and the manufacturer. We find that the termination of channel sharing by the retailer is an ineffective threat to prevent the manufacturer from entering the online market when the direct selling diseconomy is relatively low; otherwise, the effectiveness of the retailer's threat hinges on the store brand's quality. Specifically, the retailer's threat is valid if the store brand products' quality is low, whereas such threat is invalid if the store brand's quality is high. Interestingly, our results also reveal that the retailer's profit suffers “a cliff-like drop” in the store brand's quality level. This finding suggests that selling a higher quality store brand may hurt the retailer's profit once the store brand's quality exceeds a certain threshold.

What Makes Consumers Pay More for National Brands than for Store Brands - Image or Quality?

Private labels or store brands have become a major force to reckon with in grocery products.They account for over one-fifth of total volume sales in the United States and are growing faster than national brands. Generally, prices of national brands are higher than store brand prices. Therefore, a consumer would purchase the national brand (store brand) if the premium s/he is willing to pay for the national brand over the store brand is more (less) than the actual price differential between the two brands. Thus our understanding of why some consumers purchase national brands and others purchase store brands would be enhanced by gaining insights into why consumers are willing to pay a price premium for national brands over store brands. In this study, I attempt to understand why consumers are willing to pay a higher price for national brands than for store brands in grocery products. Is it because of perceived quality differential or non-quality utility? Non-quality utility is defined as the price premium that consumers would pay for a national brand over a store brand even when they perceive the quality of the two brands to be the same. The utility arises from positive brand image, brand associations, or brand equity. The study draws upon a general utility framework and develops an econometric model for separating the total price premium that consumers are willing to pay into three components -perceived quality differential, quality sensitivity, and non-quality utility. The econometric model is estimated using a survey that collected information on what consumers reported that they are willing to pay for national brands vs. store brands. The data set consists of 2237 observations from 132 consumers on 20 grocery products. The key qualitative insight is that perceived quality differential and non-quality utility or brand image dominate in different stages of the purchase process. Perceived quality differential or acceptable store brand quality is the primary driving force in a consumer's decision to participate in or consider store brand purchase. However, when it comes to deciding how much more to pay for national brands over store brands, brand image or brand equity is the dominant factor. In fact, consumers will pay a reasonable premium for national brands even if they perceive the national brand and store brand to have the same quality. This finding represents good news for national brand managers because it allows them to command a reasonable price premium even when retailers close the quality gap. National brand managers should maintain and increase their brand's equity through frequent and effective advertising and other equity-enhancing strategies. Retailers should recognize the importance of national brand equity and set their price differential appropriately. Just because retailers have closed the quality gap does not mean that they can close the price gap and maintain a low price differential. They should also not set the price differential too high and charge a low price for store brands since low prices may create negative brand associations for the store brand. The paper also discusses several other finding and their implications for segmentation and promotion strategies for both manufacturers and retailers.

A comparison between economic and organic store brands

Purpose The purpose of this paper is to tackle the issue of store brand equity by considering two store brand’s positioning strategies: those with high perceived added value (the organic store brands), as opposed to economic brands. It takes place in the current environmental considerations showing the important role played by the packaging in determining the store brand equity. Design/methodology/approach A PLS Path model divided into four sub-models enables the authors to make specific predictions about customers’ purchase intentions. It also provides a concise operational calculation of the brand equity of each studied store brand. Findings Results show that economic brands build their equity with reinforced packaging, and organic brands maximise their brand equity by using simple packaging. In general, reinforced packaging improves the perceived quality of economic store brands but destroys that of organic brands. The calculations of overall equity scores for each studied store brand reveal that economic brands could benefit from further development whilst organic brands already maximise their equity. Practical implications Results will enable large retailers to develop effective campaigns focussing on perceived quality and more specifically by designing packaging that are suitable for the positioning of their brands – a simple packaging for organic brands and a reinforced packaging for economic brands to maximise customers’ value. Originality/value This is one of the first studies to deepen the store brand equity, comparing two contrasting types of brands, by studying specifically variations of the levels of customers’ perceived quality depending of two types of packaging.

Store Brand Quality and Retailer’s Product Line Design

This study analyzes a retailer’s store brand quality decision in vertically differentiated product categories. We analyze a game theoretic model composed of one or two national brand manufacturers and a retailer, who strategically chooses the quality level(s) of its store brand(s) relative to the well-established national brand position(s) to maximize its category profit. Our analysis reveals that the nature of a retailer’s store brand quality positioning is quite different from the manufacturer’s national brand positioning decision, and that the best position for a store brand is not “as close to a national brand as possible” as previous studies suggest. Instead, the optimal quality position of each store brand is remarkably sensitive to the distribution of consumers’ willingness-to-pay. In particular, the relative proportions of quality sensitive consumers and price sensitive consumers determine the balance of three key strategic forces — the market expansion force, the retail margin force, and the consumer profitability force, leading to different optimal product line designs for store brands across different category environments. Interestingly, against multiple incumbent national brands, the retailer’s optimal product line design includes a store brand positioned at the highest quality level in the category only if most consumers are moderately quality conscious. We also analyze the implications of national brands’ brand equity for retailers’ store brand strategy.

Outsourcing in place: Should a retailer sell its store-brand factory?

ABSTRACTSeveral major grocery chains in the United States own factories that produce some of their store-brand products. Historically, these store-brand products have been the low-price, lower-quality alternatives to higher-priced national brands, but the quality and consumer acceptance of store brands have increased markedly in recent years. Although demand for store-brand products has grown, managing the associated factories can be costly for retailers, leading some to consider selling the factories to third parties.We study the impact of selling a retailer’s existing capacity-limited factory to a third party when a store-brand product competes with a similar national-brand product. We examine the equilibrium dynamics between two external suppliers and show how the outcome changes with respect to prices, capacity limitations, the distribution of profits, and the sequencing of pricing decisions. Among other things, we show that, surprisingly, the national brand’s equilibrium wholesale price may fall when the factory is sold. We also show that the retailer may be strictly better off if he sells the factory, with these benefits being above and beyond any savings in fixed ownership and operating costs. Taken together, these results imply that when the store-brand factory has tight capacity, the adverse effects due to double marginalization on the store-brand product from selling the factory to a third party may be partially or fully offset by a reduction in the national brand’s wholesale price.

The Perceived Quality of Store Brands: The Effect of Price Promotion and Quality Guarantees

This research examines the effect of price promotion on the quality of store brands and national brands. It also examines the effect of a quality guarantee on the perceived quality of store brands. These findings suggest that store brands, but not national brands, are negatively affected by price promotion. However, a quality guarantee can counterbalance the negative effect of price promotion. Finally, the research results show that purchase intention is positively affected by perceived quality.

Who Are Store Brands Buyers? Demographic Profile of Store Brand Buyers in Bosnia and Herzegovina

Store brands, also known as private labels, own brands or retail brands, are experiencing a remarkable growth in various product categories and their acceptance by consumers seems to be unquestionable. The key drivers of the store brands’ success are the increased concentration in retailing, consumers’ much more positive attitudes towards the quality of store brands and critically, in the current economic downturn, their price, which is significantly lower than that of manufacturer brands. Sales of store brands in the Southeast European markets have not picked up yet, making these markets a compelling space to study, analyze and predict the future of store brand growth and success. Thus, this study focuses on consumer’s attitudes towards store brands in the Federation of Bosnia and Herzegovina – an emerging market, which is highly attractive for international retailers. The main objective of this study is to analyze and validate the profile of a consumer of store brands in the Federation of Bosnia and Herzegovina in the context of personal care products. For the purposes of this study, the mall-intercept survey was carried out at selected hypermarket locations. Based on the extent to which consumers perceive themselves to be consumers of store brands, three consumer segments have been identified: heavy buyers, sometimes buyers and seldom buyers. These segments were then described in terms of perceived quality and price of store brands as well as demographic characteristics of respondents. The findings allow drawing some useful reflection about who are the buyers of store brands in the Federation of Bosnia and Herzegovina and what drives their preferences towards store brands. Thus, this study provides valuable information for both retailers and manufacturers.

Customer Perceived Risk on Store Brand Products: A Study on Malaysian Hypermarket Consumer Perspective

This study has focused on the customers’ perceived risk and its influence on consumers’ attitude towards retailer bands in Malaysian hypermarkets from customers’ behavioural perspective. An adapted survey questionnaire was used for data collection. Total 400 questionnaires were distributed among the customers in various hypermarkets randomly, out of which 371 were found valid for data analysis. Structural equation modelling was employed to test the hypothesis. The result confirms that income level, age, education level, family size and other characteristics are significantly influence consumers’ attitude towards retailer bands mediated customers’ perceived risk. This study has also explored that compared to national brands, it is widely accepted that store brands have very higher perceived risk in terms of quality, although many consumers felt that store brand quality was the same or even better than national brands. Finally, this study suggests that Malaysian hypermarket industries should emphasize on how to remove perceived risk from the mind of consumers for both retailers and manufacturers as these are verified to have significant relationship with consumers’ attitude towards retailer bands in Malaysian hypermarkets.

Outsourcing in Place: Should a Retailer Sell its Store-Brand Factory?

Several major grocery chains in the US own factories that produce some of their store-brand products. Historically, these store-brand products have been the low-price, lower-quality alternatives to higher-priced national brands, but the quality and consumer acceptance of store brands have increased markedly in recent years. While demand for store-brand products is higher, managing the associated factories can be costly for retailers, leading some to consider selling the factories to third parties.We study the impact of selling a retailer's existing capacity-limited factory to a third party when a store-brand product competes with a similar national-brand product. We examine the equilibrium dynamics between two external suppliers and show how the outcome changes with respect to prices, capacity limitations, the distribution of profits, and the sequencing of pricing decisions. Among other things, we show that, surprisingly, the national brand's equilibrium wholesale price may fall when the factory is sold. We also show that the retailer may be strictly better off if he sells the factory, with these benefits being above and beyond any savings in fixed ownership and operating costs. Taken together, these results imply that when the store-brand factory has tight capacity, the adverse effects due to double marginalization on the store-brand product from selling the factory to a third party may be partially or fully offset by a reduction in the national brand's wholesale price.

The Loyalty Determinant Attributes of Store Brands in Food and Grocery in Indian Retailing-An Empirical Study in Twin Cities of Hyderabad

This paper which is an exploratory study, focuses on the important factors responsible for enhancing the customer perceptions about store brands in food and grocery sector in the twin cities of Hyderabad, India. The customer perceptions associated with store brand quality, value and retailer’s response towards customers feelings would boost the regular purchase attitude of the well satisfied consumers. Understanding the customers and evaluating the customers’ impressions about the store and the store brands is a continuous process which in turn produce fruitful results to the retailers. This paper identifies the critical dimensions of store brand purchase intention in food &grocery in Indian retailing context.

Factors Influencing Consumer Behaviour towards Store Brand: A Meta-Analysis

In order to improve the effectiveness of store brand management, this study presents a meta-analysis that aggregates empirical findings from the literature on consumer behaviour towards store brands. First, the study provides a quantitative summary of bivariate findings regarding the way consumer-related factors influence store brand success. Second, the authors analyse the moderating effect of market context, product category and data type on store brand success. The resulting analysis suggest that price consciousness, quality consciousness, familiarity with store brands and perceived quality of store brands are the four most important factors that significantly influence consumer behaviour towards store brands. Market context and product category also exert significant moderating effects on the influence of some factors on consumer behaviour towards store brands. On the basis of these findings, this study concludes with a discussion of practical implications and possible directions for future research.

The Strategic Management of Store Brand Perceived Quality

Store brand plays a vital role in the success of retailers. Perceived quality is one of important factors influencing consumers’ store brand purchase intention. Store brand perceived quality is lower compared with objective quality or national brand. For this end, the purpose of this article is to examine how to manage store brand perceived quality in strategic level. This article firstly discusses how consumers evaluate product quality, and the theoretical background of the reason that store brand perceived quality is lower from the view of cue related theories. Then, consumers’ store brand quality evaluation is explored. Finally, this article presents several strategic tactics to increase store brand perceived quality. These tactics include choosing store's name as store brand name, making large advertising investment, improving store brand product package, and strengthening the relationship with store brand product suppliers.

Is producing a private label counterproductive for a branded manufacturer?

Branded food manufacturers vindicate the use of excess production capacities (idle otherwise) to justify their production of retailers’ brands. We study the distributor and food manufacturer’s private label strategy for production within a framework featuring endogenous store brand quality, bargaining power, possible differences in production technology and potential capacity constraints for the branded manufacturer. According to the structure of capacity constraint (applying to both products or private label only), the retailer may prefer to choose an independent firm whereas he selected the branded manufacturer when unconstrained. The conclusions of our article thus partially confirm branded manufacturers’ thinking: they may produce store brands when they are not capacity constrained.

Private Label Vendor Selection in a Supply Chain: Quality and Clientele Effects

We model a supply chain consisting of a national brand manufacturer and an independent manufacturer, both of whom are potential suppliers of store brand to a single retailer. The retailer serves two customer segments—a quality sensitive segment (high type) and a price sensitive (low type) segment. The retailer serves these two segments by targeting the national and store brands to the quality and price sensitive segments, respectively. When the national brand manufacturer supplies the store brand he internalizes the effect of store brand quality on the national brand's retail prices. This leads the national brand manufacturer to choose a lower store brand quality than the independent manufacturer. This decrease in store brand quality has the benefit of increased revenues from the high type customers along with an associated cost of decreased revenues from the low type customers. Thus, when the benefit outweighs the cost the retailer chooses the national brand manufacturer to supply the store brand. We show that the retailer will choose the national brand manufacturer to supply the store brand when (a) the size of the high type customer segment is large relative to the low type customer segment, (b) the valuations of the high type customer segment is large relative to the low type customer segment, and (c) the retailer's margin requirement on the store brand is not very high. Overall, these results suggest that retailers who serve a bigger sized quality (price) sensitive clientele would have the national brand (independent) manufacturer supply the store brand.

Using service quality to enhance the perceived quality of store brands

The importance of store brands in frequently purchased consumer goods marketing has been clearly established over the past decade. Marketing studies have consistently shown that perceived quality is a key determinant of store brands' success. This paper examines the impacts of five dimensions of retail service quality on the perceived quality of store brands: physical aspects, reliability, personal interaction, problem solving and policy. A conceptual model is developed and empirically tested against a sample of supermarket consumers in Taiwan. Results show that the delivery of high service quality of retailers increases the perceived quality of their store brands. In particular, reliability and personal interaction are shown to have the strongest effects among the five dimensions of retail service quality. Implications for increasing overall service quality and perceived quality of store brands for retailing practices and researchers are discussed.

Expert quality evaluation and price of store vs. manufacturer brands: An analysis of the Spanish mass market

This study compares manufacturer and store brands in terms of their objective quality as well as their price differentials for products in the food and drink, personal hygiene and home cleaning markets over the period 1989–2004. The results of descriptive and multivariate techniques suggest a positive evolution in the quality of store brands. We do not find differences in objective quality between manufacturer and store brands. But we do discern differences in the objective quality of store brands with respect to national and local manufacturer brands for a limited range of product categories. Specifically, quality is significantly higher for manufacturer brands (especially national ones) in technologically more complex categories. With regard to price, the differences favor store brands. Approval of a store's own brand is higher when the average prices for the category are lower. Furthermore, higher price differentials do not always increase the market share of a store brand. These findings have interesting implications for manufacturers and retailers in the management of their brand portfolio.

Launching store brands in emerging markets: resistance crumbles

Purpose – Store brands, which were once only found on the shelves of developed countries, are now being introduced in emerging markets in increasing amounts. The purpose of this paper is to describe the store brand process as it is found in emerging markets. In doing so, the authors explain what are the forces that have led to the development of store brands in emerging markets and the sort of strategies that should be implemented.Design/methodology/approach – The paper provides comparative statistics showing the penetration of store brands in both developed and emerging markets. Then, the conditions that determine whether store brands should be adopted by retailers are identified and discussed.Findings – Five key factors have been identified that explain successful management approaches to introducing store brands in developed as compared to emerging markets. These include the number of store brand categories available, the quality of store brands, type of products, the manufacturers of the products and ...