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National and store brand advertising strategies

Author

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  • Jenyi Chen

    (Operations and Supply Chain Management Department, Cleveland State University, Cleveland, USA)

  • Stanko Dimitrov

    (Operations and Supply Chain Management Department, Cleveland State University, Cleveland, USA)

Abstract

As the propensity of premium store brands (SBs) increases, retailers must consider different ways to drive sales besides promotional strategies. With this in mind, we consider a national brand (NB) and a (premium) SB co-existing in a market. Each brand has to decide the amount to invest in advertising its product and the prices to charge its customers, which can be determined separately or in unison. When either advertising expenditures or pricing decisions are set, each brand must keep in mind that the advertising efforts and revenue may spillover between the two brands, customers who intend to purchase the NB may end up purchasing the SB and vice versa. We derive an analytical model of the situations described and characterize equilibrium advertising decisions. We find that the characteristics of a premium SB may depend on which marketing/promoting instrument (advertising or pricing) is the primary method for driving demand; and in some situations an NB may be better off to not advertise at all and instead let the premium SB carry out all of the advertising.

Suggested Citation

  • Jenyi Chen & Stanko Dimitrov, 2015. "National and store brand advertising strategies," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 66(8), pages 1237-1249, August.
    • Handle: RePEc:pal:jorsoc:v:66:y:2015:i:8:p:1237-1249
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    Citations

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    Cited by:

    1. Li, Hengyu & Chen, Huangen & Chai, Junwu & Shi, Victor, 2023. "Private label sourcing for an e-tailer with agency selling and service provision," European Journal of Operational Research, Elsevier, vol. 305(1), pages 114-127.
    2. Cheng, Rong & Duan, Yongrui & Zhang, Jianguang & Ke, Hua, 2021. "Impacts of store-brand introduction on a multiple-echelon supply chain," European Journal of Operational Research, Elsevier, vol. 292(2), pages 652-662.
    3. Feiyan Han & Herui Wang & Hongyu Lv & Bo Li, 2022. "Research on Manufacturers’ Referral Strategy Considering Store Brand Retailers and Traditional Retailers," Mathematics, MDPI, vol. 10(18), pages 1-23, September.
    4. Karray, Salma & Martín-Herrán, Guiomar, 2022. "The impact of a store brand introduction in a supply chain with competing manufacturers: The strategic role of pricing and advertising decision timing," International Journal of Production Economics, Elsevier, vol. 244(C).
    5. Yingxue Zhao & Jiajia Nie & Jing Shao, 2017. "Business strategy analysis for an advertising service supply chain: a study with the publication industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(12), pages 1512-1520, December.

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