Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/173244
Authors: 
Nalca, Arcan
Boyaci, Tamer
Ray, Saibal
Year of Publication: 
2017
Series/Report no.: 
ESMT Working Paper 17-01 (R1)
Abstract: 
In this paper, we study how a retailer can benefit from acquiring consumer taste information in the presence of competition between the retailers store brand (SB) and a manufacturers national brand (NB). In our model, there is ex-ante uncertainty about consumer preferences for distinct product features, and the retailer has an advantage in resolving this uncertainty because of his close proximity to consumers. Our focus is on the impact of the retailers information acquisition and disclosure strategy on the positioning of the brands. Our analysis reveals that acquiring taste information allows the retailer to make better SB positioning decisions. Information disclosure, however, enables the manufacturer to make better NB positioning decisions - which in return may benefit or hurt the retailer. For instance, if a particular product feature is quite popular, then it is beneficial for the retailer to incorporate that feature into the SB, and inform the manufacturer so that the NB also includes this feature. Information sharing, in these circumstances, benefits both the retailer and the manufacturer, even though it increases the intensity of competition between the brands. But, there are situations in which the retailer refrains from information sharing so that a potentially poor positioning decision by the NB makes the SB the only provider of the popular feature. The retailer always benefits from acquiring information. However, it is beneficial to the manufacturer only if the retailer does not introduce an SB due to the associated high fixed cost.
Subjects: 
supply chain management
uncertain consumer taste
product introduction
product positioning
store brands
national brands
information acquisition
information sharing
vertical differentiation
horizontal differentiation
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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