Explanatory factors regarding manufacturer brand price consistency

Abstract

Purpose

In the marketing process, the positioning effort exerted by manufacturers for their brands is slowed by the commercial objectives of intermediary firms. In addition, to act as buyers, retailers act as suppliers of demand segments. When they receive privileged conditions in their product purchasing contracts, they do not always transfer them, totally or partially, to the final consumers through prices. The purpose of this paper is to analyse price dispersion tools available to consumer goods manufacturers to obtain price consistency.

Design/methodology/approach

An empirical study was conducted that analysed the retail price dispersion of 66 manufacturer brands in the categories of packaged foods, drugstore products, personal care products, and cellulose derivatives marketed in 574 Spanish retail outlets in different cities.

Findings

In general, manufacturer brands achieve greater price‐consistency, and therefore less price dispersion, when the consumer's knowledge of the product category is greater and when there are considerable levels of differentiation.

Research limitations/implications

One important limitation must be recognised. Manufacturers' prices offered to retailers were not controlled. Such data would have allowed one to check whether some price dispersion was caused by the discount strategy of the manufacturers themselves.

Originality/value

In this research the effect of retail competitive structure in Porter's model is incorporated. In addition, it is demonstrated that price consistency is more likely to occur for manufacturer brands, and that price dispersion is likely to be lower for such brands.

Citation

Luis Méndez, J., Oubiña, J. and Rubio, N. (2006), "Explanatory factors regarding manufacturer brand price consistency", Journal of Product & Brand Management, Vol. 15 No. 6, pp. 402-411. https://doi.org/10.1108/10610420610703739