Three essays on retailer brand introduction, quality information disclosure and distribution channel

Xiao, Ying

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https://hdl.handle.net/2142/34512 Copy

Description

Title

Three essays on retailer brand introduction, quality information disclosure and distribution channel

Author(s)

Xiao, Ying

Issue Date

2012-09-18T21:20:50Z

Director of Research (if dissertation) or Advisor (if thesis)

Liu, Yunchuan

Doctoral Committee Chair(s)

Liu, Yunchuan

Committee Member(s)

• Balachander, Subramanian
• Chhajed, Dilip
• Qualls, William J.
• Petruzzi, Nicholas C.

Department of Study

Business Administration

Discipline

Business Administration

Degree Granting Institution

University of Illinois at Urbana-Champaign

Degree Name

Ph.D.

Degree Level

Dissertation

Keyword(s)

• Distribution channel
• Quality disclosure
• Retailer brand
• Game theory

Abstract

This dissertation consists of three essays studying the impact of retailer store brand introduction to the upstream manufacturer, channel quality disclosure and the overall distribution channel efficiency. Chapter 2 studies the retailer brand introduction strategy with consumer evaluation cost. In the market place, there is a growing trend for retailers to introduce premium store brands to complement manufacturer brands. In this chapter, I study the effects of a retailer premium brand on the profitability of a manufacturer and a retailer when consumers do not have full information about the brands and have to incur a cost to evaluate the products. I show that a manufacturer can benefit when the retailer introduces a retailer brand, and the benefit may increase with the rising popularity of the retailer brand. This happens when the introduction of a retailer brand motivates the retailer to induce consumer evaluation and the manufacturer can take advantage of that to charge a high wholesale price for the manufacturer brand. Depending on the level of consumer evaluation cost, a retailer brand is more likely to be introduced in either a decentralized or a centralized channel. Furthermore, consumer welfare can be higher in a decentralized channel than in a centralized channel. Chapter 3 studies the benefits of a decentralized channel with voluntary quality disclosure. Traditional distribution channel literature suggests that a centralized channel structure is more efficient than a decentralized channel structure. In this chapter, I find that a decentralized channel can some- times outperform a centralized channel structure, and the aggregated chan- nel profit in a decentralized channel can be higher disregarding the negative impact from channel double marginalization. This occurs when the product quality information is private and the manufacturer incurs a substantial cost to disclose product quality information. I also show that the distribution of product quality plays a role in shaping consumer beliefs about product quality, leading to a more efficient decentralized channel performance. Chapter 4 combines chapter 2 and chapter 3 to study the quality disclosure strategy with a store brand introduction. In chapter 3, I study a manufac- turer’s strategy to disclose product quality with a passive retailer. In this essay, I extend the model to investigate the strategic quality disclosure from both a manufacturer and a retailer when the retailer introduces a retailer brand. I find that a manufacturer has reduced incentive to conduct quality disclosure with a store brand introduction. This incentive is also affected by asymmetric disclosure costs as well as the average retailer brand quality. Unlike in the competition case, the retailer chooses a disclosure strategy to leverage the sales for both manufacturer brand and the retailer, leading to a higher incentive to disclose when the disclosure costs are the same. The profit and channel efficiency implications are also discussed.

Graduation Semester

2012-08

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http://hdl.handle.net/2142/34512

Copyright and License Information

Copyright 2012 Ying Xiao

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