Quality and Private Label Encroachment Strategy

• 成果类型: Article
• 署名作者: Li, Xue; Cai, Xiaoqiang; Chen, Jian
• 署名单位: Beijing Foreign Studies University; The Chinese University of Hong Kong, Shenzhen; Shenzhen Research Institute of Big Data; Tsinghua University
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13549
• 发表日期: 2022
• 页码: 374-390
• 关键词: private label; QUALITY; supply chain; game theory; Retailing

摘要

We consider a supply chain consisting of an incumbent national brand manufacturer and a retailer, who wishes to determine the private label encroachment strategy. By investigating the cost-quality trade-off between lower- and higher-quality private labels, we characterize the retailer's optimal encroachment decisions. Intuitively, the retailer would choose to introduce a lower-quality private label when the quality of the national brand is high. However, we find that a higher-quality private label may better benefit the retailer under certain conditions. Moreover, we establish that introducing a higher-quality private label can improve both channel profit and consumer welfare. Using the results we derive, we explain the market practices and provide useful guidelines for retailers' private label encroachment decisions.