The influence of private labels on retailer cooperation

The influence of private labels on retailer cooperation Christian Zippel Ehrenberg-Bass Institute, University of South Australia, Australia [email protected] John Wilkinson* Ehrenberg-Bass Institute, University of South Australia PO Box 2471 Adelaide SA 5001 Australia Telephone: +61 8 8302 0995 [email protected] Thomas Vogler Ingolstadt University of Applied Sciences, Germany [email protected] Abstract Retailers’ private labels are unlike normal competitors to manufacturers’ national brands. From a channel viewpoint, retailers’ private labels do not merely compete on a horizontal level with manufacturers’ national brands. Competition between national brands and private labels also influences the vertical channel relationships between manufacturers and retailers, potentially reducing the level of cooperation manufacturers can obtain from retailers with respect to their national brands. In contrast to recent studies focusing on the influence of private labels on store image, success factors of private labels, and the marketing approaches by manufacturers in response to that success, this exploratory study examines the influence of retailers’ private labels on the level of cooperation between manufacturers and large retail chains. Surprisingly, preliminary results suggest that private labels can have a positive effect on cooperation in some situations and may offer manufacturers an opportunity to increase the level of cooperation obtained from retailers. Key words: private labels, retailer cooperation, channel management 1. Introduction This paper focuses on factors influencing cooperation fast-moving consumer goods (FMCG) manufacturers obtain from large retail chains in response to private labels. This was identified as an important issue, somewhat unexpectedly, during a study regarding the use of relationship selling strategies by FMCG manufacturers to gain retailer cooperation with respect to manufacturers’ national brands. (Reporting of the larger study is beyond the scope of this paper.) Findings are reported below, following a brief review of industry trends and prior related research, and an explanation of research methods employed in this study. Given the lack of prior research, findings add to the knowledge in the marketing and sales management literature, extending the understanding of factors influencing cooperation in a business-toretailer (B2R) context. However, further research is required since this study focused on just major German FMCG manufacturers. Within the food sector, retailers’ private labels (also known as house brands, own brands or store brands) were introduced in the United States around 1900 (Hoch and Banerji, 1993). In Germany, Aldi introduced its own private label in 1948 (Sachon and de Albeniz, 2009). By the late 2000s, the overall market share of private labels was higher in Europe than in the United States (40% versus 21%, respectively) (Gomez-Arias and Bello-Acebron, 2008). In Germany, the overall market share of private labels reached 32% in 2010 (Metro, 2011), with Aldi and Lidl having private labels accounting for 94% and 61% of their food sales revenues, respectively (Berg and Queck, 2010). In comparison, market shares of private labels within Australian and New Zealand grocery markets had reached only 9% and 12%, respectively, by 2004-05 (ACNielsen, 2005). Private labels offer increased profits to retailers through higher gross margins (Corstjens and Lal, 2000; Hoch and Banerji, 1993; Ward, Shimshak, Perloff and Harris, 2002), and enable retailers to enrich their product assortment, develop a distinctive store image and improve customer loyalty (Corstjens and Lal, 2000; Deleersnyder, Dekimpe, Steenkamp and Koll, 2007). Some retailers have re-positioned their private labels from cheap, value-for-money brands to quality brands (Berentzen, 2010; Ward et al., 2002). Such private labels often 2 compete directly with manufacturers’ national brands. For example, Sainsbury introduced its Classic-Cola in 1994, competing directly with Coca Cola and achieving 15% market share in just two years (Steenkamp and Dekimpe, 1997). Importantly, successful private labels appear to increase retailers’ bargaining power with respect to national brands (Scott Morton and Zettelmeyer, 2004), especially with those manufacturers whose brands lack substantial consumer loyalty (Meza and Sudhir, 2010; Scott Morton and Zettelmeyer, 2004; R. L. Steiner, 2004). 2. Manufacturer-retailer cooperation There is substantial evidence of cooperation between retailers and their suppliers. For example, the concept of ‘efficient consumer response’ (ECR), introduced within the fresh food industry in the 1990s in Europe and the United States, involves channel partners cooperating to increase the retail market ‘in a sustainable and profitable way for all, by better satisfying shopper and consumer needs’ (ECR, 2007). However, in these initiatives, the retailer tends to be the dominant channel partner within its supply chain network (Berman and Evans, 2010; GS1, 2008; S. Steiner, 2007). Such initiatives are beyond the scope of this study. Given broad consumer awareness of leading national brands and the emergence of successful private labels, a manufacturer of a national brand and a retailer cooperate (to some degree) vertically within the supply chain, while competing horizontally within the store (if that retailer has a private label). To some degree, the manufacturer and retailer cooperate to enhance the retailer’s performance by using national brands to improve store traffic, but also compete in-store for purchases by those shoppers (Ailawadi, Neslin and Gedenk, 2001). Consistent with the concept of ‘co-opetition’, manufacturers of national brands and retailers have simultaneous cooperative and competitive relationships (Brandenburger and Nalebuff, 1996; Yami, Castaldo, Dagnino and Roy, 2010). However, the retailer has the final decision on various factors affecting its own private label and the national brand, such as location and breadth of assortment within stores. This places ‘considerable power’ with the retailer (R. L. Steiner, 2004, p. 116). At the extreme, 3 manufacturers increasingly face the threat of having their national brands delisted, as well as experiencing difficulties in gaining shelf-space for new products (Deleersnyder et al., 2007). In summary, large retail chains are placing increased pressure on their suppliers, with private labels adding complexity to the situation─yet no published research has been conducted regarding the influence of private labels on retail chains’ behaviour toward manufacturers of national brands. This study contributes toward addressing this gap in the research literature. 3. Research methods While several studies have investigated relationships between trust and cooperation within the business-to-business (B2B) environment, none appear to have focused on B2R business relationships. The aim of the current (overall) study─of which this reported study comprises one component─was to contribute to the development of theory underlying current B2R selling practices, using the FMCG manufacturer-retailer interface as the research environment. A grounded theory approach was chosen as the research methodology since such an approach provides ‘a process that recognizes, categorizes, and relates key individual and organizational variables in a theoretical framework’ (Randall and Mello, 2011, p. 864). Grounded theory is considered appropriate when attempting to develop new theory (Jones and Noble, 2007) through comparative analysis (Bogomolova, Villani and Kapulski, 2010; Glaser and Strauss, 2008). The use of grounded theory within the fields of management, generally, and B2B relationships, specifically, has been advocated by Gummesson (2003), Goulding (2005a) and Locke (2005), for example. Initial development of grounded theory is attributed to Glaser and Strauss (1967). Grounded theory is ‘systematically obtained through “social” research and is grounded in data’ (Goulding, 1998, p. 51). Offering ‘new strategies for the generation of sociological theories’ (Wagner, Lukassen and Mahlendorf, 2010, p. 7), grounded theory has been used successfully for more than four decades ‘as a method for systematically gathering and analyzing data’ (Suddaby, 2006, p. 636) in a wide range of disciplines, including marketing (Goulding, 2005b). An underlying concept of grounded theory is the constant ‘comparative analysis’ 4 (Glaser and Strauss, 1967), in which phenomena, evolving from the data, are repeatedly tested against new and existing data, until a ‘grounded’ theory develops (Przyborski and Wohlrab-Sahr, 2008; Strübing, 2008). Analysing the emerging data is a critical step within the process (Chamaz, 2004). There are now two accepted schools of grounded theory: the purely inductive approach of Glaser, and the mainly abductive approach of Strauss and, later, Corbin and Strauss (Reichertz, 2010). There are two major differences in these approaches. First, there is a difference regarding verification of grounded theories: whether new theories should be developed, or whether these new theories also should be tested or verified. Strauss (and Corbin and Strauss) includes inductive and deductive approaches within grounded theory and, therefore, also includes verification of new theories (for example, by contrasting a newly-developed theory with existing literature). Conversely, Glaser excludes verification of newly developed theories as part of the grounded theory process (Strübing, 2008). Second, there is a difference regarding prior theoretical knowledge. Initially, Glaser and Strauss (1967) suggested that, within the grounded theory approach, theory is derived from data, and prior theoretical knowledge would contaminate emerging categories and reduce the researcher’s objectivity. Strauss later argued that prior theoretical knowledge flows into the data analysis and, furthermore, that development of theory is always theory-driven since prior knowledge also facilitates identification of effective questions (Reichertz, 2010). This study followed the Corbin and Strauss approach. Initially, a limited literature review was undertaken. Later, this was extended to concepts that arose during data analysis and, finally, to identify areas in which the literature lacks content and, consequently, relevant theory requires development (Corbin and Strauss, 2008). A search for literature specifically about the influence of private labels on B2R relationships was undertaken after the issue was identified during interviews─the issue not having been identified during the initial literature review. Grounded theory requires sensitivity on the part of the researcher to ensure all relevant issues are identified and correctly interpreted. However, sensitivity potentially reduces objectivity (Corbin and Strauss, 2008). Therefore, a balance between sensitivity and objectivity is critical (Przyborski and Wohlrab-Sahr, 2008). Prior to data collection in this study, several trial 5 interviews within the (unrelated) automotive industry were conducted to provide the principal researcher with some experience in attempting to achieve that required balance (his experience having included work within that industry). 3.1 Sampling, sensitivity and data collection Given the location of the principal researcher, this study was conducted in Germany. Besides being convenient, this choice was considered appropriate due to the high market share of private labels within the German food industry. Convenience sampling, assisted by ‘snow-balling’, was utilised for recruitment of participants since a ‘hard-to-reach’ but inter-connected population was involved (Engel and Schutt, 2010). Potential participants were identified via social networks such as Xing, a German equivalent to LinkedIn. Initially, three participants were directly recruited; as well as a recruitment ‘head-hunter’, specialising in the German retail industry, who identified additional potential participants. Potential participants also were contacted at several retail conferences. Sampling finally resulted in 20 semi-structured interviews, each of 60-120 minutes, with 18 managers of 12 major FMCG manufacturers and two consultants. Each participant had at least several years of experience within a retail environment. Participants included three Sales Directors, six Key Account Managers, two Field Sales Force Managers, four Category Managers, two Business Development Managers and one Customer Service Director. Fifteen participants worked for ten manufacturing firms among the top 100 retail suppliers in Germany, representing about 20% of the turnover of those suppliers. Six firms are processed food manufacturers, three are confectionery manufacturers, two are food and non-food grocery manufacturers, and one is a non-food grocery manufacturer. (Company and participant details cannot be provided due to confidentiality agreements.) A checklist was used to provide some structure during interviews (the initial focus being on B2R relationships and cooperative behaviour, as indicated in the Introduction). Initial sensitising questions, such as ‘What’s going on in the industry?’, ‘What’s changed in recent years?’ and ‘How does this affect you?’, were followed by questions on specific issues 6 identified in the literature or from answers to prior questions. Once the importance of private labels became apparent, questions were formulated for later interviews, such as ‘How have you reacted to the emergence of private labels?’, ‘What influence has this had on the level of cooperation you receive?’ and ‘What would happen if you would provide private labels?’ Issues identified in earlier interviews were further discussed in later interviews, specific questions being developed over time and being adapted to each participant’s situation. This approach is consistent with recommended grounded theory practice (Corbin and Strauss, 2008). It is recommended that sampling may be ceased when no additional (relevant) data are obtained from the latest interviews, since saturation is considered to have been reached at that point (Corbin and Strauss, 2008). In this study, saturation was reached after 20 interviews. 3.2 Coding Interviews were conducted in German, the native language of the interviewer and participants. Interviews were recorded, and recordings were transcribed, transferred to a software system (NVivo) and coded as soon as possible (usually on the same day). Within NVivo, open coding was used to create about 1 100 codes, which then were assigned to initial categories. The categories were refined and linked via axial coding. Finally, by selective coding, core categories were developed; the relationships of their content were analysed; and core categories influencing manufacturer-retailer cooperation were identified. This lead to development of a theoretical model, including internal relationships (Mey and Mruck, 2012). Participants occasionally used different words to describe the same term. For example, private labels were described as ‘eigenmarken’ or ‘handelsmarken’. Consequently, all transcriptions were scanned for such words and then uniquely coded. 4. Findings First, feedback from participants confirms that private labels concern major FMCG manufacturers, as reflected in the following excerpts from interviews: 7 … this private label is a huge issue for us. (Company A) Private labels are definitely a relevant issue for us in the sense of competitors as there is the situation, and this is a trend, that they cover different price areas. ... the more premium they become the more relevance they have for the consumers of our products. (Company B) There was a time when we completely ignored private labels, I mean we looked at relevant reports, but this private label was a different world and there was no need to think about it. This has changed. (Company C) Of course, we take them [private labels] as seriously as other brands. They are our competitors. (Company D) Private labels show that some brands are replaceable. (Company E) Second, several factors appear to influence the level of cooperation a retail chain provides to a manufacturer. Willingness (or unwillingness) to manufacture a private label for a retailer does not necessarily result in more (or less) cooperation from that retailer with respect to the manufacturer’s national brand. Finally, a model of factors influencing a manufacturer’s ability to obtain retail chain cooperation, given the prevalence of private labels, is illustrated in Figure 1. An explanation of those factors is provided below. ______________________ Insert Figure 1 about here ______________________ 4.1 Innovation, brand image and corporate image A factor influencing cooperation is how ‘strong’ and ‘interesting’ the national brand is to the retailer, partly based on the retailer’s perceptions of that brand being of interest to consumers viz-a-viz other brands and the retailer’s private label. There are three categories of FMCG brands. Typically, a premium or A-brand is supported by heavy marketing investment and has distribution coverage of 90-100% (Pepels, 2006). The 8 brand usually delivers a high margin to the manufacturer, is perceived by consumers to be of high-quality, and is offered at attractive prices by retailers to develop or maintain store image. Typically, a B-brand has lower distribution coverage, is cheaper and is aimed at consumers who are somewhat price-conscious. Finally, a C-brand is even cheaper, and often is found in a product category not valued by consumers and for which consumers are unwilling to pay any more than absolutely necessary (Pepels, 2006). 4.1.1 Strong brands Strong and interesting A-brands enhance the level of cooperation manufacturers obtain from retail chains, as indicated in the following statement: You need strong brands to be of interest to the retail partner. (Company F) Manufacturers of strong brands typically use four strategies to defend those brands against private labels and to obtain cooperation from retail chains. First, they invest heavily in advertising to create consumer demand as an incentive for retailers to stock the brand, as reflected in the following comments: If there would be a private label very close to our brand we would advertise even more. (Company C) The stronger the brand you sell, the more stories you have to tell [to consumer and retailer], the less important is the private label. (Company A) Second, these manufacturers undertake substantial product innovation, as indicated in the following comments: … we were very innovative in the past, and private label manufacturers are not easily able to catch up. (Company C) … to defy private labels is only possible by incredible ideas and innovation. This is different in different categories, but this will be the only chance for B-brands. 9 … We generate one third of our turnover with products which are younger than three years. (Company A). An example of an innovative A-brand is Swiffer, a ‘dust magnet’ promoted as an aid to make household chores easier. According to the German CEO of Procter and Gamble (P&G), this new brand enabled P&G to convince consumers to spend six times as much on cleaning compared to using a mop, bucket of water and some detergent (Kallerhoff, 2011). Such innovations result in higher category revenues and profits for retailers and, therefore, enhance the willingness of retailers to cooperate. Cooperation could be increased even further if the manufacturer were to provide a private label equivalent to its innovative national brand. However, many highly innovative firms decline requests for private labels due to risks regarding consumer perceptions: There are companies who transfer the development status from 6 or 12 months ago to private labels. The question is, is the distance [difference between features of national brand and parallel private label] big enough and is the brand strong enough to explain the price difference to the consumer? (Company B) Third, some firms invest in innovative production technology. ‘Our production technology for some products is so high-end, that no one was able to copy our products’ (Company C). For example, Pocket Coffee, a chocolate bar containing liquid coffee, is an A-brand not yet copied by competitors due to required high-end production technology. Finally, manufacturers develop trust in their A-brands, based on consumer perceptions of product performance developed over extended periods of time. Private labels cannot achieve such trust, particularly in the short-term: [Retailers] are not able to create [trust] within two years. (Company C) A performance bond cannot be developed with consumers by private labels. (Company G) 10 4.1.2 Weak brands B-brands and, in particular, C-brands typically compete directly with retailers’ private labels─for shelf-space as well as shoppers─since private labels are acceptable to many consumers as substitutes to weak national brands. Therefore, manufacturers obtain less cooperation from retailers in relation to these brands, particularly for a product category not highly valued by customers (such as uninteresting commodities). Consequently, a weaker brand is often in horizontal competition for shelf space with a private label. Such competition has an impact on vertical cooperation between manufacturer and retailer: … once you talk with a retailer who has his own products [private labels]. Then it becomes more complicated as they [private labels] do not need to meet the normal commercial criteria, which I have to put on my assortment, because they [private labels] are just stocked anyhow. (Company B) 4.2 Perceptions about manufacturers, national brands and private labels A manufacturer’s corporate image, the national brand image, and the image of a retailer’s private label influence consumers’ perceptions of the relative attractiveness of the brand and private label─and, therefore, their purchase decisions. In turn, this influences the retailer’s perception of the value of the national brand and, consequently, the level of cooperation provided to the manufacturer with respect to that brand. (Also, the manufacturer could influence these perceptions by sharing market research findings regarding consumer preferences with the retailer.) 4.3 Manufacturer’s account management and sales and distribution strategies A manufacturer’s account management, sales force structure, and sales and distribution strategies, including willingness to supply private labels, also influence retailer cooperation. 11 4.3.1 Willingness to supply private labels Since private labels are attractive to retailers compared to weaker national brands, a manufacturer’s willingness to provide a private label should increase the level of cooperation obtained from retailers. This approach seems to offer a manufacturer of a B- or C-brand a possibility of increasing the low level of cooperation otherwise obtained for those brands. However, a manufacturer of a weak national brand agreeing to supply an equivalent private label should recognise that eventually the private label could replace the national brand within the relevant retail chain (since consumers might perceive no difference). Also, the manufacturer could be replaced as supplier of the private label once established, since a lower-cost manufacturer would have no difficulty producing the product (being a weak brand, not based on innovation). The manufacturer also should avoid becoming dependent on the income generated by the private label and the consequent loss of leverage in negotiations with the retailer: If you provide private labels and become 100% dependent and a cooperative strategy is not followed, then you will be dead, because finally they [the retailer] will ask for so many per cent [discount], until nothing is left to survive. (Company F) Given the risks associated with the supply of private labels, manufacturers producing private labels develop sales-related strategies to minimise those risks. These include producing private labels only if there is (long-term) spare production capacity, separating private label and national brand sales forces to ensure negotiations do not overlap or become bundled, and making strategic decisions about the choice of potential private label customers─such as limiting such customers to those interested in long-term, cooperative business relationships. You must develop an internal strategy including which criteria you will use to judge who could be a good partner. (Company F) 12 4.3.2 Other selling strategies Manufacturers’ salespeople need to provide information, such as panel data and point-ofpurchase data, using that data to demonstrate how their brands have assisted the retailer. For example, after the introduction of a major national brand within a particular retail chain, the manufacturer’s salespeople could demonstrate improved sales performance of the retailer’s private label in the same category (assuming such an influence had occurred). This is explained in the following comments: To be interesting to the retail partner and to have a topic to talk about, besides strong brands on the one hand, you need arguments and information, which could be interesting to the retailer. (Company F) We could demonstrate the private label is successful when it exists in parallel to our A-brand …. From the moment when the [retailer] listed our brand, at once the private label performed even better. (Company C) Relevant analyses and arguments enable the manufacturer to obtain greater cooperation from retailers, as well as affecting the manufacturer’s infrastructure requirements: You need arguments and information which are in the interest of the retailer which he has not yet himself … we have the term business intelligence … meaning the ability to analyse data cross-functionally within our company ... from different sources like GfK, Nielsen or the SAP database, including sales numbers, customer data and so on. You must be one step ahead of the retailer. Therefore, you need the support of IT on the one hand and the ability of the sales force to analyse the data and build stories out of data and develop arguments … . (Company F) 4.3.3 Account management and sales organisation Manufacturers make medium- to long-term changes to their sales organisations in response to the changing retail environment, including changes to sales personnel to match personalities within the customer organisation. 13 We permanently adapt our sales structure to the retail development. (Company H) Importantly, changes include the separation of sales forces focusing on private labels and national brands. The following comments are from a manufacturer providing private labels as well as its own national A- and B-brands: You do have tensions within your company if you do not separate your structure. You can have two companies under one roof, one producing private labels, the other one producing the national brands, there are differences in the negotiation, pricing and so on … especially when you produce private labels for discount stores … If you do not do that [separation] then you get an identity problem. (Company F) However, not all companies are able to separate their sales forces (or associated logistics operations) due to their product structure or lack of resources. 4.4 Alternative scenarios in relation to the supply of private labels Participants identified two major types of FMCG manufacturer: (1) firms manufacturing their own national brands but not offering private labels, and (2) firms manufacturing their own national brands and private labels. The first category comprises (1a) firms producing only premium A-brands, often ‘category captains’, and (1b) firms producing A- to C-brands. The second category comprises (2a) firms providing private labels but maintaining separate sales forces (and perhaps associated logistics and manufacturing operations) for national brands and private labels, and (2b) firms employing the same salespeople to sell national brands and private labels. A third category comprises firms manufacturing only private labels (Liebmann, Zentes and Swoboda, 2008). However, such firms were excluded from this study given the focus on effects of private labels on cooperation received with respect to national brands. 14 4.4.1 Manufacturers of A-brands not offering private labels These firms monitor private labels and their drift toward the premium category. However, they do not yet view private labels as direct competitors since there are still very few premium private labels, mainly due to high levels of product innovation undertaken by these manufacturers─which cannot be copied by low-cost producers of private labels. For these manufacturers, private labels have little or no negative influence on the level of cooperation obtained from retailers. These manufacturers are aware of opportunities provided by their strong brands to gain cooperation from retailers. For example, they use ‘shopper insights’ (based on market research) and panel data to argue for additional product listings, or for more or superior shelf-space. Such approaches are especially successful when combined with ECR and a sales force with expertise to develop themes (‘stories’) around national brands and to effectively explain market knowledge acquired by the manufacturer. 4.4.2 Manufacturers of A- to C-brands not offering private labels The situation for firms manufacturing the whole range of A-, B- and C-brands is very different to that of firms manufacturing only A-brands. These manufacturers typically use the strength of their A-brands to attempt to gain cooperation from retailers to list their weaker brands. For example, some firms recently reorganised their sales forces so that all brands are now handled by a single customer sales team for each retail chain, with the aim of simplifying internal communication and negotiating ‘with one voice’ for all brands. 4.4.3 Manufacturers offering private labels The situation for these manufacturers with respect to their national brands is similar to that for category 1a or 1b firms (depending on the range of brands marketed). With respect to private labels, the situation is quite different, since cooperation is often sought by retailers attempting to source high-quality private labels, recognising that manufacturers of leading brands are best placed to provide high-quality private labels. Generally, therefore, it is in the 15 interests of retailers to be cooperative toward manufacturers of premium national brands who are willing to supply equivalent private labels─even extending that cooperation to include the manufacturer’s national brands. There are different approaches to account management by these manufacturers, however. 4.4.3.1 Manufacturers offering private labels through separate sales departments These manufacturers clearly separate their sales forces (and perhaps logistics and manufacturing operations) between national brands and private labels. Through completely separate communication channels, these manufacturers limit retailers’ ability to use insights gained about private label production technology and costs in negotiations about national brands. The approach also limits retailers’ ability to gain leverage by linking negotiations regarding national brands and private labels. 4.4.3.2 Manufacturers offering private labels through existing sales departments If a manufacturer employs one account team for a retail chain (perhaps because logistics or resource constraints preclude separation of the sales force), the retailer is likely to gain a negotiating advantage. Negotiating with just one account team, the retailer is better able to leverage experience and knowledge relating to the private label when negotiating about the national brand on issues such as price (discounts), for example. Consequently, the retailer can assert more pressure and is likely to feel less compelled to cooperate with respect to the national brand. Conversely, it might seem that a single account team should be better placed to gain trust from the retail chain through a coordinated account-based approach. For example, the account team would be able to use market research data relating to national brands to suggest new product additions to ‘round out’ a retailer’s private label product category, resulting in increased category turnover and profit for the retailer. Such an experience could provide a ‘leap of faith’ in the account team in relation to future recommendations, including those relating to national brands, improving opportunities for collaborative projects involving those brands. However, if separate sales forces are employed for national brands and private labels, 16 almost the same situation can be achieved through appropriate internal communication and coordination across the two sales forces (although high-level direction is required). 5. Discussion, limitations and recommendations for future research Findings from this study provide insight regarding the influence of private labels on cooperative behaviour between manufacturer and retailer, and identify different categories of manufacturer-retailer interaction. The study also identifies an important question of how best to transfer retailer experience with private labels to positive perceptions of the manufacturer’s national brands. While small, the sample is reasonably representative of major FMCG manufacturers in Germany, although with an over-representation of food-related firms. For exploratory research purposes, this representation seems adequate. However, findings cannot be generalised to other manufacturer-reseller situations, such as those involving small FMCG manufacturers selling to retailers, manufacturers of industrial products selling to distributors or wholesalers, or to other countries. Further research is necessary to fully understand the issues identified to date. While detailed suggestions for such research are beyond the scope of this paper, tentative hypotheses based on these exploratory findings are presented in Table 1, in the hope that these might stimulate further reflection and research in this area. ______________________ Insert Table 1 about here ______________________ 17 References ACNielsen, 2005. The power of private labels in Europe: An insight into consumer attitudes. 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Strategic retail management. Gabler, Wiesbaden. 21 Innovativeness of manufacturer Corporate image of manufacturer Manufacturer’s sales and distribution strategies─ including willingness to supply private labels National brand attributes and image Manufacturer’s account management and sales force structure Consumer perceptions of national brand viz-a-viz private label Manufacturer’s ability to obtain cooperation of retail chain in relation to national brand Retailer perceptions of national brand viz-a-viz private label Figure 1: The influence of private labels on retailer cooperation in relation to manufacturers’ national brands 22 Core Category Product Category Code Apparent private label influence on cooperation regarding equivalent national brand A-brand No influence B- or C-brand Negative influence H1a: The stronger the national brand as perceived by the retailer, the less is the negative influence of private labels on cooperation regarding that brand. Product type Separate sales forces Positive and negative influence Sales structure Sales force Single sales force Tentative hypothesis Positive and negative influence H1b: The weaker the national brand as perceived by the retailer, the greater is the negative influence of private labels on cooperation regarding that brand. H2a: The willingness to provide private labels has a positive effect on the level of retailer cooperation obtained for the equivalent national brand if there are separate national brand and private label sales forces. H3a: Separate sales forces for A-, B- and C-brands have a negative effect on the level of retailer cooperation obtained for B- and C-brands. H2b: The willingness to provide private labels has a negative effect on the level of retailer cooperation obtained for the equivalent national brand if there is one sales force for national brands and private labels. H3b: A single sales force for A-, B- and C-brands has a positive effect on the level of retailer cooperation obtained for B- and C-brands. Knowledge Story telling Positive influence H4: The ability to transfer market knowledge within the manufacturer has a positive impact on the level of retailer cooperation the sales force is able to obtain for national brands. Table 1: Tentative hypotheses emerging from interpretation of participant feedback following NVivo coding 23