Group for Research in Decision Analysis

G-2009-40

Is Umbrella Branding Strategy always Profitable for Private Labels?

and

Umbrella branding is a strategy that consists in using the same name to market different products which may, or may not, be related. The purpose of this paper is to assess under which conditions such a strategy is profitable for a retailer offering, along national brands, its own store brand. The analysis takes into account the strategic interactions between the manufacturers and the retailer, as well as the positive spillover between sales of the private label in different categories. Surprisingly, our results show that umbrella branding strategy may lead to lower profits for the retailer. Actually, the results depend ultimately on the market potential of the different brands in the different categories and the degree of competition between the national brand and the private label.

, 19 pages

This cahier was revised in March 2011