Manufacturer brands versus private brands: Hoch's strategic framework and the Swedish food retail sector
Abstract:The purpose of this study was to contribute to the knowledge of how manufacturer brands choose and can choose to defend themselves vis-à-vis introduction of private brands by retailers. The study adopts the same research approach as a Dutch empirical study (Verhoef, P. C., E. J. Nijssen, and L. M. Sloot. 2002. “Strategic Reactions of National Brand Manufacturers Towards Private Labels – An Empirical Study in the Netherlands.” European Journal of Marketing 36 (11/12): 1309–1326) that tested and rejected large parts of the original and well-known conceptual framework by Hoch (Hoch, S. J. 1996. “How Should National Brands Think About Private Labels?” Sloan Management Review 37 (2): 89–102) consisting of six manufacturer strategies to defend against private brands. This study is based on the Swedish market, a more typical market compared with the Dutch market characterized by high innovation level and high penetration of private brands. The study builds on a combination of qualitative and quantitative interviews with brand managers at 100 manufacturers in the Swedish Fast Moving Consumer Goods (FMCG) market. The results support Hoch's original conceptual framework concerning appropriate defence strategies for manufacturer brands. However, the two differentiation strategies – value for money and new and improved – are seen as one category of the strategies, which creates a simpler and more distinct structure to the framework. The results show that it is the largest and the leading manufacturers that choose this strategy. The lower the penetration of private brands, the larger the share of manufacturers that choose this strategy. The study gives a more nuanced picture concerning the motives behind the strategies and also concerning the differences between how manufacturers act depending on size and market share.
Document Type: Research Article
Affiliations: Department of Business Administration, Lund University, Lund, SE, 21620, Sweden
Publication date: 2014-03-15