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International Journal of Electronic Business Management, Vol. 8, No. 1, pp. 56-67 (2010)

COMPARATIVE ANALYSIS OF MARKETING STRATEGIES FOR MANUFACTURERS’ AND RETAILERS’ BRANDS Tsui-Yii Shih Department of International Business National Taipei College of Business Taipei (100), Taiwan

ABSTRACT Manufacturers and retailers have chosen varied brand portfolio structures for business performance. This study surveys consumer attitudes toward manufacturers’ brands and retailers’ store brands chosen from Taiwan retailing outlets. Research findings indicate that manufacturers’ brands intensify high quality and high price strategies, pursue appropriate promotion activities, and develop brand equity helpfully to the purchase intention of consumers. Without a careful evaluation process, a brand endorsing strategy is disadvantageous to manufacturers. Another aspect, low prices, promotion activities, brand endorsed strategies, and increasing store images positively support to the brand equity and consumer purchase intentions of retailer store brands. Keywords: Marketing Strategy, Brand Alliance, Structure Equation Model

1. INTRODUCTION *

More retailers have branded houses and use their corporate names to promote their store brands. Under these circumstances, manufacturers’ brands sold by almost all stores do not, however, differentiate the individual stores; this intensifies price competition or a brand’s image between store markets [28]. In the Taiwan retail market, in order to gain a higher margin and support promotional activities, retail stores also develop numerous store brands with low prices to increase consumer purchase intentions. Major business types that develop store brands include: retail outlets, convenience store chains, and supermarkets. For example, Carrefour, a French chain of large volume retail stores operating in Taiwan, creates two types of store brands for low and high pricing strategies, each with divergent product quality. By contrast, RT-Mart, a similar chain of volume retailers operating in Taiwan, commits to a low price strategy for its store brand. All these products enjoy high sales growth in the market. Hence, marketing strategies of store brands such as a low pricing strategy or emphasizing perceived quality in terms of brand endorsed strategy by manufacturers’ brands are all applied by Taiwan retail stores. The increasing power of retailers’ store brands leads to strong pressure on manufacturers’ brands (Famous manufacturers possessing well known national brands). Current literatures that focus on comparative analysis of marketing strategies for *

Corresponding author: [email protected]

manufacturer brands and retailers store brands are limited, and thus there is potential to conduct a study providing theoretical foundations and academic insights. This research creates a concept framework to verify the performance of marketing strategies from a consumer-based viewpoint, and to provide two practical brand management models for manufacturers’ and retailers’ store brands. Early researchers indicated that consumers’ purchase intentions are primarily influenced by marketing activities such as price, promotions, product quality of a company and its added values [1,12,24,29,41,44]. Another scholarship focused on the brand equity of firms which are decided in terms of brand image, perceived quality, brand awareness, brand loyalty, and brand associations, etc [1,34,41,46,47]. Notably, a variety of theoretical perspectives and frameworks have been advanced in the field [20,32,39,42,46]. In this study, the marketing strategies of manufuacturer brands dicussed include high prices, promotions, brand endorsing strategy. Another aspect under discussion, the marketing strategies of retailer store brands formatted in the conceptual framework include low prices, promotions, brand endorsed strategies, and store image. By adopting an integrated perspective emphasizing the roles of marketing strategy and brand equity, this paper addresses these key gaps by developing empirical firm-marketing explanations of consumer purchase intentions for related academic research in terms of a two-level structure equation model method. The objective of this study is to investigate and evaluate the effects of business marketing strategy, brand equity on consumer

T. Y. Shih: Comparative Analysis of Marketing Strategies for Manufacturers’ and Retailers’ Brands purchase intentions and then examine their importance in allowing manufacturers’ (lean to hypotheses H1, H3 and H4) and retailers’ store brands (lean to hypotheses H2, H5 and H6) to develop a competitive position in the commercial marketplace. The study includes developing a questionnaire that builds from the following conceptual framework (See Figure 1). The rest of the paper is organized as

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follows. Section 2 gives a review of the literature in the areas of marketing strategies, consumer-based brand equity and purchase intention. Section 3 introduces the methodology used in the research. Section 4 presents the background of data sources and analysis and gives the research findings of the study. Finally, section 5 provides the discussion and conclusion.

Figure 1: Conceptual framework of manufacturer brands and retailer’s store brands

2. LITERATURE REVIEW Branded companies need to create the operation police, marketing strategy and brand management system for maintaining business performance. This section outlines literature reviews of former scholars and defines a theory base for this study. 2.1 The Effect of Consumer-based Brand Equity on Purchase Intention Brand equity has been considered in many contexts including brand loyalty, brand awareness, perceived quality, brand associations; the differential effect of brand knowledge; the difference between overall brand preference and multi-attributed preference based on objectively measured attribute levels; and overall quality and choice intention [41]. Some researchers [35] divide brand equity into attribute-based and non-attribute-based components, while other researchers [7,45,46], propose a brand equity measurement method that subdivides brand equity into different dimensions including brand awareness, brand associations, perceived quality and brand loyalty. Washburn et al. [41] suggest three different viewpoints for considering brand equity: the consumer-based perspective; the financial perspective; and the combined perspective. Pappu et al. [34] argue that the definitions of brand equity can

be broadly classified into two categories: the financial-perspective, and consumer-perspective or marketing-perspective. In the study, consumer-based brand equity is concerned and thus is measured for manufacturers’ and retailers’ store brands. Customer-based brand equity and its effect on consumption behavior become a widely discussed area of marketing. Looking at consumer-based brand equity, Aaker [1] considers brand awareness, brand associations, perceived quality, and brand loyalty to be the most important dimensions of consumer-based perspectives. Keller [22] indicates that customer-based brand equity consisted of two dimensions, brand knowledge and brand image. Yoo et al. [46] use confirmatory factor analysis to measure consumer-based brand equity as a three-dimensional construct, combining brand awareness and brand associations into one dimension. Pappu et al. [34] also find for support the hypothesized four-dimension (brand awareness, brand associations, perceived quality, and brand loyalty) model of consumer-based brand equity. High brand equity levels lead to higher consumer preferences and purchase intentions [7] [47]. Firms with high brand equity usually have good performance [34]. In academia, purchase intention is a measure of the willingness to buy a product [9,14] and has also been operationalized as the probability that a consumer will buy a product [11,12]. Purchase intention is one type of judgment about how an

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individual intends to buy a specific brand. Variables such as considering buying a brand, and expecting and recommending to buy a brand measure purchase intention [25,26,38]. Summarily, integrating the theory synthesis and dimension choices provided by the scholarly community, this study measures the effects of brand equity on purchase intentions for manufacturers’ brands and retailers’ store brands via consumer-based viewpoints. For simplifying the model and avoiding the choice complexity of broad branded staple goods, the research ignores two factors (brand awareness and brand associations) and choose three dimensions, including brand loyalty, brand image, and perceived quality to be the measurement factors of customer-based brand equity. Furthermore, we choose three items including willing purchase, considering purchase and recommendation purchase to be the measure items of a purchase intention factor. Based on the theory base, the study includes two hypotheses as follows. H1: The brand equity (brand loyalty, brand image and perceived quality) of manufacturer brands relates positively to the degree of purchase intention of the consumer. H2: The brand equity (brand loyalty, brand image and perceived quality) of store brands relates positively to the degree of purchase intention of the consumer. 2.2 The Effects of Marketing Strategies on Brand Equity and Purchase Intention Marketing decisions affect brand equity and purchase intention. Managers need to evaluate the marketing activities and reduce or avoid brand-hurting activities. Yoo et al. [46] indicate marketing activities such as price, slogans, symbols, packaging, company image, country of origin, store image, advertising expenditures, and promotional events have important influence on the brand equity and purchase intention. In addition, some scholars have identified marketing activities (e.g. price, promotion, brand alliance and product trial, etc) as major sources of effects on the brand equity and consumer purchase intentions [6,20,32,39,42]. Next, four marketing factors including price, promotion, endorsement strategy, and store image (one factor only for retailers’ store brand) are chosen in the study to introduce their effects on brand equity and consumer purchase intentions, as discussed below. 2.2.1 Price For consumer products, consumers use price as an important extrinsic cue and indicator of product quality or benefits. Customers often perceive high priced brands to be of higher quality and less vulnerable to competitive price cuts than low priced brands [12,21,46]. Activities based on lowering prices can place brands in danger by provoking

consumer confusion; instability and variability leads to an image of unstable quality [43]. The pricing policy for the brand can create associations in consumers' minds with the relevant price level for the brand in the category, as well as with its corresponding price volatility [23]. In Taiwan, most manufacturer brands define the product using higher pricing strategy, but retailers’ store brands follow a low pricing strategy. This study thus uses price as one factor in the research analysis and examine its effect on brand equity and purchase intention. 2.2.2 Promotion Sales promotions involving short-term price reductions, such as special sales, media-distributed coupons, package coupons, cents-off deals, price deals, rebates, and refunds, likely erode brand equity despite the short-term gain in financial performance. Frequent promotions may jeopardize brands in the long run because they cause consumer confusion based on unanticipated differences between expected and observed prices, which results in an image of unstable quality [43,46]. Consumers become more price and promotion sensitive over time because of increased promotions [30]. Further, Jedidi, Mela and Gupta [18] show that, in the long-term, promotions have a negative effect on brand equity. Price deals as incentives to increase sales have been shown to have a negative effect on brand equity [40]. However, reactance theory [4] indicated that consumers are more likely to purchase a product when their freedom is curtailed by a restriction (such as a time limited offer). Increased choice probability, or purchase intention in terms of firms’ short-term promotional activities, has also been shown empirically [11]. Therefore, while ignoring long term effects, this study uses promotion as a factor and discusses its short-term influence on brand equity and purchase intention. 2.2.3 Brand Alliance: Brand Endorsing and Endorsed Strategies Two brands whose associations interact to form a new brand combination comprise a brand alliance [42]. A company can employ two of its own brands while in other cases the strategy takes the form of a branding alliance between two different marketing organizations [36,37,41]. Kim et al. [24] argue that how various types of brand alliances affect consumer evaluations of a product's attributes, and how product trials influence these evaluations, are important. Strong brand associations can affect the credibility of brands in an alliance, and consumers assume that high-equity brands will likely partner with other high-equity brands, increasing the value of the combination and the two individual brands as well [42]. The use of corporate brand endorsement as either a name identifier or logo identifies the product

T. Y. Shih: Comparative Analysis of Marketing Strategies for Manufacturers’ and Retailers’ Brands with the company and provides reassurance for the customer. Equally, negative effects or associations can do harm and have long-lasting effects across multiple product lines. Thus, both aspects need to be weighed in determining the role of corporate brand endorsement in brand architecture [13]. Brand cooperation between retailers and manufacturers represents a corporate brand alliance. Retailers with strong brand equity will help to increase the output of branded manufacturers; similarly, manufacturers with high brand equity will help to increase the sales volume of retailers’ store brands. This study thus identifies two factors including brand endorsing (for manufacturer brands) and brand endorsed strategies (for retailer store brands) and exams their effects on brand equity and consumer purchase intentions. 2.2.4 Store Image For retailers’ store brands, the study uses store image as an additional factor. Martineau [29] states store image as the way in which the store is defined in the shopper's mind. Martineau [29] proposes that store image is part of the retail store's personality. Dodds et al. [12] find that store image has significant positive effects on perceived quality. The quality of a given brand is perceived differently depending on which retailer offers it. Good-image stores attract more attention, contacts, and visits from potential customers. Store image is an overall picture that is more than the sum of the parts, for the parts interacts with one another in the consumer's mind [16]. Building from these concepts and integrating the scholars’ viewpoints, this research submits hypotheses for the development of questionnaire items, in order to explore the relationships among marketing strategy, brand equity and the degree of purchase intention of consumer for manufacturers’ brands and retailers’ store brands. The study constructs the following hypotheses: H3: The marketing strategies (high price, promotion activity and brand endorsing strategy) of manufacturer brands relates positively to the brand equity of manufacturer brands. H4: The marketing strategies (high price, promotion activity and brand endorsing strategy) of manufacturer brands relates positively to the degree of purchase intention of the consumer. H5: The marketing strategies (low price, promotion activity, and brand endorsed strategy and store image) of store brands relates positively to the brand equity of store brands. H6: The marketing strategies (low price, promotion activity, and brand endorsed strategy and store image) of store brands relates positively to the degree of purchase intention of the consumer.

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3. RESEARCH METHOD This study surveys consumer attitudes toward manufacturer brands and retailers store brands chosen from Taiwan retailing outlets. The basic concept frameworks designed for manufacturer brands and store brands are similar. However, the study adds “store image” as an additional marketing factor for store brands. In addition, the questionnaire items are designed and then modified to make them appropriate for assessing attitudes toward manufacturer brands and retailer store brands. In this study, manufacturer brands are identified as famous manufacturers possessing national brands. For example, Yuen Foong Yu Paper Manufacturing Co., Ltd. (YFY Paper), the pioneer of private paper manufacture in Taiwan, has several toilet paper brands including May Flower, Tender, etc. Uni-President, the famous food products manufacturer in Taiwan, which owns several national brands, such as Dr. Milker, UNI Puding, and Tung-I Snack Noodles etc. In spite of possessing well-known national brands, both of them offer OEM or ODM products for retailers. Therefore, during the survey process, we explained the definitions of manufacturer brands and retailer store brands first, and then invited respondents to answer the question items. Five local retail chains, including RT-Mart, Carrefour, Geant, Welcome, and Watsons, were chosen as survey sites. Telephone interviews with the corporate head offices (five local retail chains) was conducted first to ensure the right survey places (which included target respondents regarding purchase experiences of both manufacturers’ and retailers’ brands). Then, five research assistants stopped passers-by in each retail store and talked about the survey with the respondents. Incentive gifts (NT$20 to NT$30 gifts were used depending on the degree of difficulty of the data collection) were used to encourage potential respondents’ involvement and to increase the response rate. The data are collected over a period of three months (July to September, 2007). Data analysis methods used in this research include factor and reliability analysis, and a two-level structural equation modeling method.

4. RESEARCH FINDINGS This section discusses the data source and analysis results of the survey. More than 100 questionnaires are administered in each retail outlet for a total of 530 questionnaires (including RT-Mart, Carrefour, Geant, Welcome, and Watsons), with 491 valid questionnaires (93%) returned for this analysis. Based on the returned questionnaires, 46 percent of respondents are male, 54 percent of respondents are female. About 46 percent of the respondents are between 21 and 30 years old, and 44 percent have a university degree. Further, 50 percent of respondents have household incomes are between NT$51

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thousand dollars and NT$100 thousand dollars per year. 4.1 Factors Identification and Analysis The questionnaire items of the study construct are listed as in Table 1 and Table 2. To verify the relationships among the factors, the study performs factor analysis and reliability analysis using SPSS statistical package [31]. This entails a two stage process. Factor analysis is undertaken to identify underlying constructs from among sets of many interrelated items. The principal-axis method is used for factor extraction, with factor interpretation carried out by Variamax rotation. Prior to the analysis, the research standardizes the factor analysis and variables for the data. One variable is standardized and included in the model, “Store image,” labeled “STOM” (Question item: The store image of retailer is important to my evaluation of retailers’ store brands). Table 1 shows the factor analysis and reliability analysis for manufacturers’ brands. Factors including price strategy, promotion strategy, endorsing strategy, brand loyalty, brand image, perceived quality, and purchase intention are produced using factor analysis. With the exception of promotion strategy and brand loyalty, which have lower factor loadings and lower α values for the item to total correlation, all factor loadings of variables exceed 0.6, while the α values for the item to total correlation exceed 0.7. The reason for this exception may be that the study does not identify specific manufacturer brands, instead offering only broad concepts and explanations, perhaps leading some respondents to confuse the questions on brand promotion and brand loyalty, in turn causing lower factor loadings and α values. Table 2 shows the factor analysis and reliability analysis for retailers’ store brands. Seven factors are produced using factor analysis. Except for the item “promotion activity”, which has lower factor loadings and a lower α value for the item to total correlation, all factor loadings of other variables exceed 0.7, while the α values of the item to total correlation exceed 0.6. The seven factors of manufacturer brands and other factors of store brands appear to be appropriate for next two-level SEM analysis. 4.2 The Relationships of Marketing Strategies, Brand Equity and Purchase Intention Structural equation models are evaluated by chi-square significance tests supplemented with adjunctive fit indices, such as the comparative fit index (CFI: [2]), and the root mean square error of approximation (RMSEA), use to quantify the amount of model misfit. Sample size has little influence on the CFI and RMSEA indices [27]. Bentler [3] suggests that the CFI index value be at least 0.95 for confirmed models. Browne and Cudek [5] suggest

that RMSEA values less than 0.08 imply an adequate model fit and values less than 0.05 imply a good model fit [15]. The LISREL 8.30 statistical package is used in the study [19]. Table 3 shows the properties of CFA for manufacturer brands and retailer’s store brands and the values and test standards of the Fit index for these two models. In the manufacturer brand model, the chi-square values are 51.64 with 24 degrees of freedom. The value of CFI for this model is 0.98, which certainly satisfies the criterion that the CFI index value be at least 0.95. The root mean square error of approximation (RMSEA) value of 0.048 implies a good model fit. In the store brand model, the chi-square values are 102.89 with 30 degrees of freedom. The CFI for this model is 0.96. The RMSEA value of 0.07 implies an adequate model. Further, in store brand model, the errors between the price strategy and the endorsed strategy for store brands and are positively correlated; the errors between willing purchase and recommendation purchase are negatively and significantly correlated. Table 4 lists the effects of latent variables for two marketing models, which shows that the marketing strategies and brand equity all have significant positive effects on the purchase intention of consumers for both manufacturer brands and store brands. Further, the marketing strategies of manufacturer brand and store brand has significant positive effects on the brand equity. In sum, the results of the two-level structural equation modeling (SEM) analysis partly support H1 to H6, with the exception of brand endorsing strategy of manufacturer brands (See Table 3). The study results of H3 and H4 indicate that brand endorsement strategy appears to be negatively supported for the marketing strategies adopted by manufacturers. In the manufacturer brands model shown in Table 4, the indirect effect of marketing strategy to purchase intention is 0.30, which is more than the direct effect of marketing strategy to purchase intention (0.19), derived from the intermediate effect of brand equity. Concerning retailer store brands model, the indirect effect of marketing strategy on purchase intention is 0.46, which is more than the direct effect of marketing strategy to purchase intention (0.20), similarly obtained from the intermediate effect conclusion of brand equity. Consequently, brand equity, either in manufacturer or retailer brands, can mediate the effects of marketing strategies on purchase intentions of consumer perceptions. Therefore, in spite of a firm’s good marketing strategies, positive generation of products brand equity and consumer purchase intentions, specific brand equity of products are helpful to advance the executive effects of marketing strategies adopted by firms regarding consumers purchase intentions.

T. Y. Shih: Comparative Analysis of Marketing Strategies for Manufacturers’ and Retailers’ Brands Table 1: Factor analysis and reliability analysis for manufacturer brands Factor Item-total Factor names and question items Eigenvalues loadings correlation Price strategy (KMO: 0.65***) 1.97 Manufacturer brands provide a high value in relation to the higher price than store brands. We 0.54 0.47 must pay for it. Manufacturer brands provide higher advertising promotions for the higher price than store brands. 0.72 0.58 We must pay for it. Manufacturer brands provide a higher image for the 0.84 0.64 higher price than store brands. We must pay for it. *** Promotion strategy (KMO: 0.50 ) 1.45 I think the promotion activities of manufacturer 0.67 0.45 brands, in general, are very good. In general, I like the promotion activities for 0.67 0.45 manufacturer brands. *** Endorsing strategy (KMO: 0.65 ) 2.27 If famous manufacturers endorse retailer brands, I 0.58 0.56 increase the purchases of such manufacturer brands. If famous manufacturers endorse retailer brands, I increase my quality evaluations of such 0.96 0.80 manufacturer brands. If famous manufacturers endorse retailer brands, I increase my brand image evaluations of such 0.87 0.76 manufacturer brands. Brand loyalty (KMO: 0.50***) 1.38 I consider myself to be loyal to manufacturer 0.62 0.38 brands. Compared to store brand, I prefer manufacturer 0.62 0.38 brands. Brand image (KMO: 0.50***) 1.67 Manufacturer brands have a famous and strong 0.82 0.67 personality. Manufacturer brands have a strong image. 0.82 0.67 2.31 Perceived quality (KMO: 0.70***) Manufacturer brands offer very reliable products. 0.75 0.68 The likely quality of manufacturer brands is 0.92 0.79 extremely high. The likelihood that manufacturer brands will be 0.76 0.69 satisfactory is very high. *** Purchase intention (KMO: 0.69 ) 2.14 I am willing to pay money for manufacturer brands. 0.80 0.66 I consider buying manufacturer brands if I need to 0.84 0.69 buy something. I recommend manufacturer brands to other 0.63 0.56 consumers. *** Note: Extraction method: Principal Axis Factoring. p value is significant at the 0.000 level. In summation, in manufacturer brands’ model, high prices and promotion activities are positive supports, however, brand endorsing strategies are negatively supported to the brand equity and purchase intentions of manufacturer brands. Brand equity is significantly related to consumer purchase intentions, and has intermediate and helpful effects on marketing strategies to consumer purchase intentions. Another aspect, in retailer store brands’

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Cronbach’s α 0.74

0.62

0.84

0.55

0.80

0.85

0.79

model, low prices, promotion activities, brand endorsed strategies, and store image are positive supports to the brand equity and purchase intentions of retailer store brands. Brand equity is significantly related to consumer purchase intentions, and has intermediate and helpful effects on marketing strategies to consumer purchase intentions. Consequently, both manufacturers and retailers adopt well-evaluated marketing strategies to increase the

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brand equity of products, which will lead to higher consumer purchase intentions. Compared to low price strategies adopted by retailer store brands to obtain consumer recognition, manufacturer brands are suggested to adopt high price strategies to portray product quality or brand personality to win recognition from consumers. Furthermore, in addition

to the positive effects of promotion activities and store image, this research suggests either manufacturers’ brands or retailers’ store brands add new features (e.g. distinguishing brand equity, brand alliance strategy, etc.) to products helpfully to enhance, maintain, and increase consumer recognition and purchase intentions.

Table 2: Factor analysis and reliability analysis for retailer’s store brands Item-total Factor Factor names and question items Eigenvalues correlation loadings Price strategy (KMO: 0.72***) 2.25 Store brands provide a low value in relation to the 0.75 0.67 lower price than manufacturer brands. We must pay for it. Store brands provide lower advertising promotions 0.79 0.69 for the lower price than manufacturer brands. We must pay for it. Store brands provide a lower image for the lower 0.84 0.72 price than manufacturer brands. We must pay for it. Promotion strategy (KMO: 0.50***) 1.57 I think the promotion activities of store brands, in 0.76 0.57 general, are very good. In general, I like the promotion activities for store 0.76 0.57 brands. Endorsed strategy (KMO: 0.76***) 2.58 If retailer brands are endorsed by famous 0.86 0.82 manufacturers, I increase the purchases of such retailer brands. If retailer brands are endorsed by famous 0.92 0.85 manufacturers, I increase my quality evaluation of such retailer brands. If retailer brands are endorsed by famous 0.88 0.83 manufacturers, I increase my brand image evaluation of such retailer brands. Brand loyalty (KMO: 0.50***) 1.64 I consider myself to be loyal to store brands. 0.80 0.64 Compared to manufacturer brand, I prefer store 0.80 0.64 brands. Brand image (KMO: 0.50***) 1.62 Store brands have a famous and strong personality. 0.79 0.62 Store brands have a strong image. 0.79 0.62 Perceived quality (KMO: 0.73***) 2.38 Store brands offer very reliable products. 0.82 0.74 The likely quality of store brands is extremely high. 0.89 0.79 The likelihood that store brands will be satisfactory is 0.78 0.72 very high. 2.21 Purchase intention (KMO: 0.70***) I am willing to pay money for store brands. 0.75 0.66 I consider buying store brands if I need to buy 0.88 0.73 something. I recommend store brands to other consumers. 0.70 0.63 Note: Extraction method: Principal Axis Factoring. *** p value is significant at the 0.000 level.

Cronbach’s α 0.83

0.73

0.92

0.78

0.77

0.87

0.82

T. Y. Shih: Comparative Analysis of Marketing Strategies for Manufacturers’ and Retailers’ Brands

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Table 3: Properties of CFA for manufacturer brands and retailer’s store brands Manufacturer brands Store brands Standardized loading (T-value) Standardized loading (T-value) λ δ λ δ Marketing strategy Price strategy 0.67 ( 8.08) 0.55 ( 5.19) 0.33 ( 6.23) 0.89 (14.74) Promotion strategy 0.29 ( 4.94) 0.92 (14.58) 0.72 (13.64) 0.48 ( 8.15) Brand endorsing/endorsed strategy -0.25 (-4.28) 0.94 (14.89) 0.54 (10.65) 0.71 (12.89) Store image 0.33 ( 6.25) 0.89 (14.89) λ ε λ ε Brand equity Brand loyalty 0.66 (12.08) 0.57 (14.35) 0.69 (13.29) 0.52 (14.47) Brand image 0.89 (14.72) 0.21 ( 7.74) 0.91 (16.17) 0.17 ( 8.74) Perceived quality 0.90 (14.82) 0.19 ( 7.28) 0.92 (16.25) 0.16 ( 8.07) Purchase intention Willing purchase 0.80 (16.87) 0.36 ( 9.79) 0.84 (14.34) 0.30 ( 8.17) Considering purchase 0.84 (17.34) 0.30 ( 8.14) 0.78 (16.28) 0.39 (12.04) Recommendation purchase 0.63 (13.39) 0.60 (13.62) 0.81 (13.94) 0.35 ( 9.08) Errors correlate Price strategy Brand endorsed strategy 0.30 ( 6.81) Willing purchase Recommendation purchase -0.15 (-5.12) Model standards and Fits Chi-Square/df < 3 51.64/24=2.15 102.89/30=3.43 GFI > 0.9; AGFI > 0.9; CFI > 0.95 GFI=0.98; AGFI=0.96; CFI=0.98 GFI=0.96; AGFI=0.93; CFI=0.96 NFI > 0.9; NNFI > 0.9; CN > 200 NFI=0.97; NNFI=0.97; CN=408 NFI=0.95; NNFI=0.95; CN=230 RMSEA < 0.05; RMR < 0.05 RMSEA=0.048; RMR=0.024 RMSEA=0.070; RMR=0.034 Table 4: Effects of latent variables for manufacturer brands and retailer’s store brands Brand equity Purchase intention Latent Variables Standardized Standardized T-value T-value loading loading Manufacturer brands Marketing strategy Direct effect 0.56 5.36 0.19 2.16 Indirect effect 0.30 Total effect 0.49 Brand equity Direct effect 0.54 6.26 Indirect effect Total effect 0.54 Store brands Marketing strategy Direct effect 0.68 8.23 0.20 2.82 Indirect effect 0.46 Total effect 0.66 Brand equity Direct effect 0.67 8.00 Indirect effect Total effect 0.67

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5. DISCUSSION AND CONCLUSION This study explores marketing strategies and brand issues in the Taiwan manufacturing and retailing industries. Consumers are surveyed and statistical methods are used to verify key factors of a firm’s marketing and branding strategies. The contribution of this research is to incorporate marketing strategies and brand issues, as well as firms’ strategies and performance in order to construct a meta-dialogue for their relationships in terms of consumer-based viewpoints. Manufacturing firms and retailers are both increasingly establishing explicit brand architecture to guide this evolution and facilitate improved cohesion of marketing strategy across their markets [13]. Consumers rely on a brand or vendor reputation to alleviate the risk of making a poor purchasing decision. In this study, the empirical results support the hypotheses. Except for the endorsement strategy, a high/low price strategy and promotion activities of manufacturer/store brands enhance the brand equity and the degree of purchase intention of consumers. Further, the brand equity of manufacturer brands and retailer store brands both positively enhance the degree of purchase intention of a consumer. Based on the foregoing discussion, the study submits the following management implications: For manufacturer brand, Wulf, OdekerkenSchröder and Ossel [44] find that the national brand is still quite powerful compared to the store brands despite the promotional efforts made by these store brands. Apparently, when consumers are aware of the brand, they have strong, positive brand associations [22]. Therefore, compared to retailers’ brands, manufacturer brands should commit to a brand image of high price and high quality and adopt the appropriate promotion activity. For manufacturer brands, the study results indicate that a brand endorsing strategy decrease the brand equity and consumer purchase intention of manufacturer brand. Therefore, before performing a brand endorsing strategy, the manufacturer should intensify product quality and brand equity to reduce the negative influence on sales of the manufacturer’s brands. Through channel evaluations and complementary endorsement strategies, manufacturers’ brands can cooperate with various channels including both a real and virtual channel (e.g., TV shopping and Internet stores) to increase brand recognition. After careful evaluation of the cooperating retailer’s store brands, the brand endorsement strategy executed by the manufacturer’s brand increases the degree of recognition of the brand name, but does not harm its brand image and therefore, increases product sales in terms of OEM (original equipment manufacturing) /

ODM (own designing & manufacturing) / OBM (own branding & manufacturing) strategies. On the other hand, a growing number of retailers develop their own brands to win customer brand loyalty and market share. An imitative strategy by the retailer is always valid if the volumes of its own brand are sufficient to obtain reasonable economies of scale, so that the retailer can sell at a low price [10]. Wulf et al. [44] indicated that, for a retail brand or a store brand, firms do not always invest directly in the individual "brand", preferring instead to rely on the successful promotion of the store itself. The store brand lives off of the credibility and image of the store rather than owning a specific brand value in and of itself. However, the study findings show that the brand equity of retailers’ store brands gives consumers confidence and increases their purchase intentions. Retailers should improve the store image, enhance the product’s perceived quality, and establish brand equity and brand loyalty among consumers. Endorsement by famous manufacturers, low price strategies, and appropriate promotional activities all enhance the brand equity of store brands and the degree of purchase intention of consumer. In increasingly M-shaped income distribution, low priced store brands may be able to acquire recognition among low-income consumers. However, retail store executives should not ignore the consumption ability of high-income and quality emphasized consumers. Retailers could provide varied positioning store brands for distinct customer groups [8]. In commercial environments, firms exist in the markets in terms of varied product positions. Therefore, in addition to large manufacturer brands, certain (usually, small sized) manufacturers may promote their brands as economic items (products with lower prices). Such manufacturer brands, without specific brand personalities, are not the targets of this research, which led to limitations of this research. Future study can identify manufacturer brands with distinguishing levels, and then compare with varied retailer brands concerning marketing strategy applications, brand equity, and consumer purchase intentions. Another limitation of this research is that it is based on only 491 respondents. However, it does consist of respondents who are involved in the decision and execution of the product purchase process. Future research could enlarge the sample size or choose other industries or product categories to verify the conceptual framework and generalize the model.

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ABOUT THE AUTHORS Tsui-Yii Shih is an Assistant Professor in the Department of International Business at the National Taipei College of Business. She received her Ph.D. degree in Department of Management Science at National Chiao-Tung University (NCTU) in 2005. Her research interests include international business, marketing, industrial analysis and decision science. Her research has been published or accepted in such journals as the Service Industries Journal, European Journal of Operational Research and International Journal of Technology Management. (Received December 2008, revised April 2009, accepted June 2009)

T. Y. Shih: Comparative Analysis of Marketing Strategies for Manufacturers’ and Retailers’ Brands

製造商與零售商品牌行銷策略之比較分析 施翠倚 國立台北商業技術學院國際商務系 台北市中正區濟南路一段 321 號

摘要 為了企業的經營績效，製造商和零售商選擇了各式不同的品牌組成結構。本研究以台 灣的零售商店為例，調查消費者對製造商品牌和零售商自有品牌的使用態度。研究結 果顯示，製造商品牌宜強化高品質、高價格策略，採取適當的促銷活動和發展品牌權 益，以提升消費者的購買意願。若未經過審慎評估，品牌授權策略對製造商品牌是不 利的。另一方面，低價、促銷活動、品牌背書策略以及提升商店印象，將有助於增加 零售商自有品牌之品牌權益和消費者購買意願。 關鍵詞：行銷策略、品牌聯盟、結構方程模式 （*聯絡人：[email protected]）

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