Generic products for retailers in a mature market

Since their introduction, generic grocery products have been a major centre of controversy. Statistics indicate that the rapid growth phase for generics has ended and that this concept has now entered the maturity phase of its life cycle. Since generics have now become a permanent feature of the grocery industry, retailers and manufacturers must formulate their marketing strategies carefully, whether these strategies are for offensive or defensive reasons. These critical strategic questions are focused on and recommendations for future strategies now that generics have reached maturity are made

A Price Discrimination Model of Trade Promotions

Critics have long faulted the wide-spread practice of trade promotions as wasteful. It has been estimated that this practice adds up to $100 billion worth of inventory to the distribution system. Yet, the practice continues. In this paper, we propose a price discrimination model of trade promotions. We show that in a distribution channel characterized by a dominant retailer, a manufacturer has incentives to price discriminate between the dominant retailer and smaller independents. While offering all retailers the same pricing policy, price discrimination can be implemented through trade promotions because they induce different inventory-ordering behaviors on the part of retailers. Differences in inventory holding costs have been shown to be an important determinant of consumer promotions. Our analysis suggests that differences in holding costs are also potentially an important driver for the use of trade promotions. The implications from our model explain a number of anecdotal and/or empirically observed puzzles about how trade promotions are practiced. For example, our analysis explains why chain stores welcome trade promotions but independents do not. Our analysis outlines implications for managing trade promotions.channels of distribution, channel power, trade promotion, forward buying