The Strategic Positioning of Store Brands In Retailer - Manufacturer Negotiations

Store brands are the only brands for which the retailer is responsible not only for promotion, shelf placement, and pricing, but also for positioning the brand in product space. We argue that retailers strongly value control over store brand positioning because they will be unable to source a national brand with their desired product positioning. This is because retailers have an incentive to position store brands as close substitutes to leading national brands - a location in product space which other national brand manufacturers would not find profitable. We present empirical evidence that is consistent with the results of our model.