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Private Label Sourcing Negotiation: Premium PL from Dual Brander

  • S. Chan Choi
Conference paper
Part of the Springer Proceedings in Business and Economics book series (SPBE)

Abstract

As private labels become proliferated, retailers are introducing premium PLs that replace marginal national brands. We examine a special case of tiered private label sourcing, in which a premium PL is supplied by the manufacturer of the corresponding NB (dual brander), and an economy PL is supplied by a dedicated PL supplier. In our model, the NB’s wholesale and retail prices are determined by the traditional bilateral Nash game. However, the premium PL’s wholesale price is determined through a profit-sharing negotiation between the channel members. From an equilibrium-negotiation solution, we derive profit implications of NB’s brand equity, the retailer’s reputation, and the intrinsic quality of the NB. Interestingly, even if the retails holds a strong negotiation power, we find it optimal for the retailer leave some chips on the table for the NB manufacturer.

Keywords

Premium private label Equilibrium Negotiation Distribution channel 

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Rutgers Business School – Newark & New BrunswickPiscataway TownshipUSA

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