Handbook of Research on Retailing
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Handbook of Research on Retailing

Edited by Katrijn Gielens and Els Gijsbrechts

The advent of e-commerce and the rise of hard discounters have put severe pressure on traditional retail chains. Boundaries are blurring: traditional brick & mortar players are expanding their online operations and/or setting up their own discount banners, while the power houses of online retail are going physical, and hard discounters get caught up in the Wheel of Retailing. Even successful companies cannot sit back and rest, but need to prepare for the next wave of change. In the face of this complexity, it is all the more important to take stock of current knowledge, based on insights and experience from leading scholars in the field. What do we know from extant studies, and what are the ensuing best practices? What evolutions are ahead, and will current recipes still work in the future? This Handbook sheds light on these issues.
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Chapter 8: Consumer preference distributions and corresponding storebrand strategies: a compilation

Raj Sethuraman

Abstract

Traditional belief holds that store brands are simply low-priced alternatives offered to consumers with the sole and explicit purpose of switching them from national brands to the retailer’s store brand. In reality, store brands play several fairly distinct roles depending on the nature of consumers in the market. Associated with these roles is a set of strategies that retailers can adopt with respect to their brands. A formal understanding of the various roles, conditions, and the related strategies will enable retailers to appropriately implement their private label programs and national brand managers to better manage their brands in response to the strategies adopted by the store brands. In this chapter, a framework is developed for classifying consumers into four segments based on their preferences for national brands and store brands. This framework simultaneously takes into account supply and demand conditions for national brands and store brands. It gives rise to 15 consumer preference distributions, which describe the consumer markets that retailers can potentially face. For each consumer market, the author discusses feasible store-brand strategies based on three criteria: (i) whether the store brand(s) deployed is standard, economy, premium, or niche private label, or a combination; (ii) whether the intended role of the store brand vis-à-vis national brands is no switching, low switching, high switching, or total switching; and (iii) whether the intended role of the store brand from a category perspective is no expansion, low expansion, or high expansion.

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