Shoppers' alternative choice of store and manufacturers' brands: An examination of the attraction and compromise effects toward retailer's profit optimization

Store brands, and particularly premium store brands, continue to capture greater attention from retailers, as premium store brands are an important strategic asset for retailers. Marketers need to better understand how much the presence of premium store brands contributes to the retailers' overall profits in terms of altering consumer brand choice behavior. This study focuses on investigating the extent to which the addition of an attraction manufacturer's/store brand affects the consumer brand choice decision. This study also focuses on examining the extent to which the addition of a compromise manufacturer's/store brand affects the consumer brand choice decision. Based on the results of these effects, the retailer's overall profits are estimated.; Results of this study suggest that the presence of an attraction manufacturer's brand in an existing market significantly affects the consumer brand choice decision. Similarly, the addition of an attraction store brand to an existing market also significantly affects the consumer brand choice decision. In sum, the introduction of an attraction manufacturer's/store brand into an existing market induces an increase of the target manufacturer's brand market share when the newly introduced brand is asymmetrically dominated by the target manufacturer's brand, but only in the case that the relevant attribute in the brand choice decision is the predominant attribute for the target manufacturer's brand.; Results of this study also suggest that the presence of a compromise manufacturer's brand in an existing market significantly affects the consumer brand choice decision. Likewise, the introduction of a compromise store brand significantly affects the consumer brand choice decision. In other words, the addition of a compromise manufacturer's/store brand leads to the decrease of non-target manufacturers' brands' market shares whether or not the relevant attribute in the brand choice decision is the predominant attribute for the compromise manufacturer's/store brand that is added to an existing market. Finally, results of the estimation of the retailer's overall profits indicate that the presence of a compromise premium store brand induces the largest contribution to the retailer's overall profits among the cases dealing with attraction manufacturers'/store brands and compromise manufacturers'/store brands.