Mass Retailers' Advertising Strategies Against Commodity Stores

Fabian Bergès () and Sylvette Monier-Dilhan
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Fabian Bergès: UMR GREMAQ-INRA

Economics Bulletin, 2013, vol. 33, issue 4, 2968-2981

Abstract: A retailer has different opportunities to advertise in the media: emphasizing the store image or promoting specifically its private label (PL). In the first option, advertising benefits all products sold, whereas in the alternative, only store brands are concerned by image improvement. We analyze the retailer's advertising campaign strategies when its competitor's format is a small commodity store. PL quality is endogenous and chosen according to the competitor's product range. We show the retailer prefers to advertise the store rather than its PL. However, this strategy may push commodity stores out of the market and reduce social welfare.

Keywords: Advertising; Retailing; Competition. (search for similar items in EconPapers)
JEL-codes: L1 M3 (search for similar items in EconPapers)
Date: 2013-12-23
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