Sustainable Decision Making for Store Brand Product

Ji-Hung Choi, Taewan Kim and Sang-Uk Jung
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Ji-Hung Choi: Department of Marketing, College of Business, Eastern Michigan University, Ypsilanti, MI 48197, USA
Taewan Kim: SKK Business School, Sungkyunkwan University, Seoul 03063, Korea
Sang-Uk Jung: Business School, Hankuk University of Foreign Studies, Seoul 02450, Korea

Sustainability, 2018, vol. 10, issue 11, 1-14

Abstract: We investigate a multi-brands sustainable channel coordination problem where a national brand manufacturer sells a product through two local retailers competing against their own store brand product, respectively. We shows how the retailers strategically optimize the price and quality of private brands given the customer tastes and the production costs of the store brands in order to make their store brands sustainable. We identify two underlying strategic forces; a competitive force, and a quality force. First, we find that retailers have an incentive to position their store brand far away from the national brand in order to maximize monopolistic power. This strategic force attenuate the incentives for customer to switch to other retailer’s store brands. One the other hand, we show that the retailers prefer increasing the store brand’s quality to get more profit margin when the production cost is relatively high as well.

Keywords: product line design; store brand; private label; product positioning; game theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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