Work

E-tailer's choice between low-quality store brand and high-quality store brand: the role of data-driven marketing

Year: 2025

Type: article

Abstract: In addition to selling the manufacturer's national brand, the e-tailer also sells low-quality or high-quality store brands. Meanwhile, data-driven marketing can help the e-tailer sell more store brands, but it can also promote national brand sales, which may intensify competition and hurt the e-tailer. Considering the impact of data-driven marketing, our study investigates the e-tailer's choice between low-quality and high-quality store brands, and analyzes how store brands affect the national brand manufacturer, consumer surplus, and social welfare. We find that, due to data-driven marketing, the e-tailer can benefit from the low-quality store brand even though its quality disadvantage is pronounced. The e-tailer prefers the high-quality store brand if the procurement cost of the high-quality store brand is low and the quality disadvantage of the low-quality store brand is relatively moderate. Data-driven marketing makes the e-tailer more likely to choose the low-quality store brand. Second, the national brand manufacturer prefers the high-quality store brand to the low-quality store brand if the quality disadvantage of the low-quality store brand is unremarkable or if the procurement cost of the high-quality store brand is high. Third, when the e-tailer implements data-driven marketing, if the procurement cost of the high-quality store brand is high and the quality disadvantage of the low-quality store brand is unremarkable, then compared with introducing the high-quality store brand, introducing the low-quality store brand can improve consumer surplus and social welfare. Furthermore, we expand our models to take into account coexistence of the low-quality store brand and the high-quality store brand, the different impacts of data-driven marketing, marketing cost sharing, and endogenous store brand quality.

Source: Journal of Industrial and Management Optimization

DOI: 10.3934/jimo.2025090

Authors: Jiaqi Tian, Yang Liu, Qi Zhang

Institutions: Northeastern University, Dalian University of Technology, Zhejiang University of Finance and Economics

Language: English

Topic: Consumer Market Behavior and Pricing

Subfield: Marketing

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: diamond

Funder: National Natural Science Foundation of China

Awards: G6174251192, G7589451225, G929772814