Retailers Private Brand Products Pricing Decision Research

With the private brand products' appearance and development, the competition between manufacturers and retailers become more and more violence. The industry's inherent operate model that traditional manufacturers only responsible for production and retailers only responsible for sales is broken. Retailers through developing and selling their private brand products to improve their profit, and also to increase their competitive power and industry status. AS the private brand products play an increasingly important role in the traditional retail industry, academics have also began to research various aspects of private brand products one after another, include the motivation of developing private brand products, the benefit's change between manufacturers and retailers after private brand products' developing, and also about the consumer surplus, the social welfare and ..so on. But research about how to reasonable positioning private brand products, and how to reasonable pricing private brand products so as to help retails to realize profit maximization also remains to be further. Therefore, in this paper, we regard the retail's market power, the quality of private brand products and the price of manufacturer brand products as the three factors that affect private brand products' pricing, through models derives, numerical analysis and empirical analysis to discuss the private brand products' best pricing decision strategy.Although the development of the private brand products make retailers to find a new profit growth point, but how to choose the category of private brand products and how to reasonable pricing private brand products is the key to maximize retails' profit.If retailers don't make reasonable pricing decisions after introducing private brand products,results may be counterproductive. This paper studied the above three factors that affect private brand products' pricing by models building and solving, and also analysis the influence when the three factors work together. The study found that: (1)the price of the private brand products have positive correlation relationship with retailers' own market power ; (2) the price of the private brand products have positive correlation relationship with its own quality; (3) the price of the private brand products and the price of manufacturer brand products have positive correlation relationship, if manufacturer brand products' price improve, then private brand products' price improve,whereas,if manufacturer brand products' price reduce,then private brand products' price reduce; (4) retailers' total profit is positively correlated with every of the three variables when the three variables(market power, private brand products' quality and manufacturer brand products' price) work together. The studies results are basically consistent with the reality economic law.This paper hope that through the analysis of the influencing factors of private brand products' pricing,we can provide a small reference function for the later retailers to pricing their private brand products.