Store-brand introduction and production arrangement in the presence of multiple retailers

Store brands play an increasingly important role in retailing business, leading more and more retailers to introduce store brands. Abundant research focused on competition between store brands and national brands and counterstrate- gies that national-brand manufacturers can take to counter store-brand introduction. A little research studied the store-brand production issue, however, all under single-retailer scenarios. To approach the real world, we employ game theory to model interaction between a national-brand manufacturer and multiple locally monopolist retailers, one of whom has capability and motivation to introduce a store brand. Five Stackelberg games are build and solved to investigate: how the presence of the non-store-brand retailers affects the store-brand retailer's decision on and profitability in the store-brand introduction; how the store-brand retailer should arrange store-brand production; whether there is a win-win situation where both the store-brand retailer and the national-brand manufacturer are better off with the latter producing the store brand. Accordingly, our study offers a novel rationale for why so many, especially lead- ing, national-brand manufacturers are involved in the store-brand production. Some useful managerial suggestions are proposed on the store-brand introduction and production arrangement.