Interplays between manufacturer advertising and retailer store brand introduction: Agency vs. wholesale contracts

Qichao Shen, Bo He and Qiankai Qing

Journal of Retailing and Consumer Services, 2022, vol. 64, issue C

Abstract: In retail supply chains, manufacturers' advertising for national brands and retailers' store brand introduction may relate to each other, and two types of contracts, i.e., agency contract and wholesale contract, are widely used. This paper uses game-theoretic models to investigate the strategic interaction between a manufacturer's advertising strategy and a retailer's store brand introduction strategy. We derive the equilibrium outcomes, including wholesale price, retail price, market demand, retailer's and manufacturer's profits under different contract forms. We find that when the product cost is small relative to the perceived value of the store brand, the introduction of a store brand will benefit the retailer. The retailer is more likely to introduce store brands under the wholesale contract than under the agency contract. In addition, compared with the wholesale contract, the agency contract may increase both the manufacturer's and the retailer's profits and lead to Pareto improvement for them.

Keywords: Store brand; Advertising; Customer perceived value; Game theory (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joreco:v:64:y:2022:i:c:s0969698921003672

DOI: 10.1016/j.jretconser.2021.102801

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