Brand Positioning and Consumer Taste Information

35 Pages Posted: 25 Jan 2017 Last revised: 5 Dec 2017

See all articles by Arcan Nalca

Arcan Nalca

Smith School of Business

Tamer Boyaci

ESMT European School of Management and Technology

Saibal Ray

McGill University - Desautels Faculty of Management

Date Written: December 4, 2017

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.

Keywords: supply chain management, uncertain consumer taste, product introduction, product positioning, store brands, national brands, information acquisition, information sharing, vertical differentiation, horizontal differentiation

Suggested Citation

Nalca, Arcan and Boyaci, Tamer and Ray, Saibal, Brand Positioning and Consumer Taste Information (December 4, 2017). ESMT Working Paper No. 17-01 (R1). Available at SSRN: https://ssrn.com/abstract=2905614 or http://dx.doi.org/10.2139/ssrn.2905614

Arcan Nalca

Smith School of Business ( email )

Smith School of Business - Queen's University
143 Union Street
Kingston, Ontario K7L 3N6
Canada

Tamer Boyaci (Contact Author)

ESMT European School of Management and Technology ( email )

Schlossplatz 1
Berlin, 10178
Germany

HOME PAGE: http://https://www.esmt.org/tamer-boyaci

Saibal Ray

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. (W)
Montreal, Quebec H3A 2M1
Canada

HOME PAGE: http://people.mcgill.ca/saibal.ray/

Register to save articles to
your library

Register

Paper statistics

Downloads
117
Abstract Views
462
rank
234,676
PlumX Metrics