Manufacturer's characteristics that determine the choice of producing store brands

Abstract

Purpose

The purpose of this paper is to study the rationale for the production of store brands and the possible existence of different store brand manufacturer segments according to their competitive position, size, advertising investment, sector concentration and type of product.

Design/methodology/approach

The method to obtain information is a survey developed in Spain and answered by manufacturers of consumer packaged goods. The methods applied are descriptive (Crosstabs and Anova) and multivariate techniques (correspondence analysis, chi‐square automatic interaction detector (CHAID), and cluster).

Findings

The article provides empirical evidence in favour of the rationale for the production of store brands by non‐leading medium to small‐sized firms and against this practice by leading manufacturers. It also shows the existence of different manufacturer segments.

Research limitations/implications

The main disadvantages of this research are based on their exploratory nature and on the method to obtain information (postal survey): self‐selection, small sample size and measuring of the variables (perceptual bias). Additionally, the goodness of fit of the CHAID applications is not very high.

Practical implications

The insights presented here can be used by manufacturers from other countries with a less developed store brands market, such as Eastern European or Latin American. Leading manufacturers or mid‐size manufacturers with high advertising investment can still compete head to head with store brands. The other manufacturers must adapt their strategies to collaborate with retailers in order to produce store brands.

Originality/value

There are no previous studies that empirically assess the rationale for the production of store brands. Moreover, no empirical research has focused on the manufacturers' group identification regarding their decision to produce store brands. This study determines the most significant variables in the identification of manufacturer groups.

Citation

Gómez, M. and Rubio Benito, N. (2008), "Manufacturer's characteristics that determine the choice of producing store brands", European Journal of Marketing, Vol. 42 No. 1/2, pp. 154-177. https://doi.org/10.1108/03090560810840952