Research On Countervailing Power In Different Sales Model Of Retailer's Private Brand

WAL-MART,Carrefour,BHG,Vanguard and other large supermarkets,with multi regional supermarket chain and a large amount of purchase,are still dominant in the procurement of products to the upstream suppliers,that is,large retailers enjoy a certain discount in the purchase(with a certain countervailing power).The countervailing power of large retailers,may lead to conflict between retailers and suppliers or other issues.This problem has attracted the attention of the relevant government departments.As early as 2006,government has introduced measures to control the problem.People's Republic of China Anti Unfair Competition Law(revised draft)published in 2016,which added to the specification that operators have relatively dominant position but implement unfair trade practices.Large retailers using countervailing power to put unreasonable trading conditions is a typical abuse which the operators of relatively dominant position use the power to crush the weak operators.The research on countervailing power will help to clarify the influence of the power on the whole market competition situation and the influence of each interest subject.This can provide useful reference to the relevant government departments to investigate the abuse of the relative advantages of the operators;also can improve the accuracy and effectiveness of law enforcement.However,in recent years,with the rapid development of online and offline sales channels in retail market,retailers are also facing the pressure of double decline in performance and profits.Retailers have also been involved in the development and sales of private brand.Especially large retailers,in the retail stores will find private brand exhibition area,which has a strong strength to development and sale private brand products,and private brand will further enhance the competitive advantage of large retailers and brand influence.And private brand is regard as an external choice of retailers,which is different form manufactured brand.Private brand can strengthen the countervailing power of retailers bargaining with upstream suppliers,enhance the retailer's countervailing power,and have a profound impact on the price effect and welfare effect of countervailing power.So it is necessary to consider the issue of private brand when studying the countervailing power.Domestic discussion on the issue of private brand is mainly based on case analysis,theoretical research is weak.On the choice of private brand sales model,scholars have less discussion.And in the study of the problem of countervailing power scholars rarely discuss the issue of private brand;in the discussion of private brand scholars are less concerned about the retailer's countervailing power.Different from other research of retailers' countervailing power,this thesis considers the problem of retailer's private brand.However,retailers are still selling their private brand products through a unique mode of monopoly,for example all of private brand of Watson sales through its own store sales.Under the mode of the monopoly of private brand,private brand and manufacture brand have a difference,this way will further strengthen the monopoly of large chain retailers to maintain advantage.In reality,there are also examples that a retailer wholesales its private brand to other retailers,as in the German supermarket can be found in the sale of McDonald's potato chips.In the dual channel sales model,retailers can impose constraints through private brand wholesale prices on other retailers,which have different effects on the market competition situation and welfare ultimately.Based on this view,this thesis mainly discusses that the influence of countervailing power on different variables under different sales models,also makes comparison and analysis for each variable in different mode.Based on the analysis of this thesis,we answer whether the retail enterprises and the upstream suppliers have the incentive to take the private brand dual channel sales model.At the same time,the influence of countervailing power on market competition and welfare may provide some useful references and suggestions for policy makers to make decision.In this thesis,we assume that there is a supplier in the upstream market,there is a large retailer and a small retailer in the downstream market.The large retailer have countervailing power,so enjoy the manufacturer brand wholesale price discount,the small retailer do not enjoy such a price discount.Under the monopoly sales model,the large retailer not only sell manufactured brand products,but also sell private brand products;the small retailer only sell manufactured brand products.Differently,in dual channel sales model the big retailer will wholesales private brand to the small retailer,the small retailer sales manufactured brand products and private brand products.Through analyzing the influence of countervailing power on each variable in different sales models,and this thesis compares and analyzes each variable in different sales model.The study shows that:under the monopoly sales model,the influence of countervailing power on the wholesale price of the large retailer manufactured brand is uncertain.In different,dual channel sales model,countervailing power will reduce the large retailer purchase price.In different sales model,the impact of countervailing power on the supplier's decision to determine the optimal manufactured brand price and small retailer manufactured brand wholesale price is uncertain.At the same time,the enhancement of countervailing power will increase the profit of the big retailer.The same to the monopoly sales model,in dual channel sales model,the impact of countervailing power on consumer surplus and social welfare is uncertain.Compare with the monopoly sales model,in dual channel sales model,the wholesale price and retail price of different brand products are lower,while consumer surplus and social welfare are higher.Because the expansion of private brand sales mode to strengthen the competition effect,and then make the upstream suppliers to reduce the wholesale price of manufactured brand,then transmit to the downstream market to make retail prices of different brand lower,ultimately benefit to consumers,and make social welfare increase.By comparing results of different sales model,we find that the large retailer will adopt dual channel mode under certain conditions,the small retailer will choose dual channel sales model,because of the higher profit level in the double channel sales model.However,the supplier in the dual channel sales model will get a lower profit level.The innovation of this thesis is:study on the private brand sales model selection problem,many scholars have discussed from the monopoly sales model,rarely consider the dual channel marketing problem that the retailer wholesales private brand to other retailers,which is different from other studies.This thesismainly discusses the issue of private brand;meanwhile consider the retailer's countervailing power.Also the impact of the countervailing power,motivation of retailers taking dual channel sales model is the main problems that we discuss.Unfortunately,this thesis is based on strict assumptions,in order to highlight the focus and simplify the processing,the model is assumed to be more stringent,and it is inevitable that the result may have some differences with the actual.Limited by the collection of data,the theoretical analysis is carried out,there is no empirical test.