Research On Retailer’s Service Provision And Store Brand Introduction Strategy

With the boom in science and technology and the growing sophistication of e-commerce,purchasing products through direct channels is becoming increasingly attractive to consumers.Many manufacturers are faced with the choice of whether to open direct channels,and retailers are facing increasingly fierce competition in the marketplace.For retailers,improving their competitiveness is the most direct and effective way.Currently,it is a common business phenomenon for retailers to provide retail services and introduce their own brands.Therefore,it is very meaningful to study the strategy of retailer service provision and store brand introduction and the question of whether manufacturers should open direct channels.Based on the existing research and related theories,this thesis constructs a two-stage game model led by manufacturers and uses the inverse induction method to find the equilibrium solutions under different situations,and compares the optimal strategies of manufacturers and retailers to provide reasonable analysis for the decision making of manufacturers and retailers.The results show that when the manufacturer has not yet opened direct channel,i.e.,single-channel supply chain,when the quality of store brand products is less than one-half of the manufacturer’s branded products,the service demand coefficient and the quality of store brand products jointly determine the strategy choice of the retailer,and conversely,the optimal strategy of the retailer must be to provide both service and introduce store brand.Moreover,when the retailer provides services,the manufacturer always profits from it.When a retailer introduces its own brand,whether or not it also provides services,it will be to the detriment of the manufacturer’s interests,but the overall profit of the supply chain can be improved to varying degrees.When a manufacturer opens a direct channel,i.e.,a dual-channel supply chain,providing services alone is not the optimal choice for the retailer,regardless of the channel dominance.In the case of a dominant retail channel,the optimal strategy for the retailer is always to provide services and introduce store brand,while in the case of a dominant direct channel,the optimal strategy is determined by consumer acceptance of the direct channel,the quality level of store brand products,and the cost of direct sales.Retail services can increase the profits of both manufacturers and retailers and ease the competition between channels,while the introduction of private brands only increases the profits of retailers,often to the detriment of manufacturers,and the competition between channels becomes more intense.Based on the optimal choice of retailers,manufacturers deciding whether to open direct channels should consider the combined effects of consumer acceptance of direct sales channels,service demand coefficients,the quality level of private label products,and the cost of direct sales.