Distribution strategies for volume and premium brands in highly competitive consumer markets
2008 (English)In: Journal of Retailing and Consumer Services, ISSN 0969-6989, Vol. 15, no 4, 250-265 p.Article in journal (Refereed) Published
This article deals with distribution strategies for volume and premium brands in the automobile industry. Like some other consumer markets, the car market has become subject to substantial overcapacity in the last decade and subject to a pressure to keep costs low, while at the same time manufacturers emphasize immaterial values and attempt to strengthen the brand to get an advantage over competitors. A number of theoretical themes are related to extensive case studies carried out in Sweden, the UK, Germany, Spain and Australia. One hundred and nine interviews were carried out with manufacturers, importers, dealers and industry experts. Theories used in the study emerge from two research traditions. First, perspectives on corporate identity and brand management are applied to distribution channels. Second, theories on channel structure, i.e. the choice of selling through one channel or dual-multi-distribution, solus- and multi-franchising, and channel ownership, i.e. direct and indirect channels are applied. Theories are woven together in a concluding analysis of distribution strategies for volume and premium brands. Some conclusions on the brand's influence on distribution strategies emerge in the study. The findings suggest that while distribution activities may be shared among channel members in a channel selling volume brands, there is a great need for coordination in channels selling premium brands to secure premium values that reflect the brand's raison d'être and justify its price premium. Anchorage in the local market is crucial for motivating the volume brand dealer, and also critical for volume dealers to stay viable and competitive. Identification with the local dealer appears to be crucial in designing distribution strategies for volume brands. A premium brand is less related to the local market: Rather, its competitive advantage is based on strong brand identification and the consumer is likely to be attracted by the image of the premium brand than by the local dealer. Creating a consistent brand experience is thus decisive for premium brands whose content to a great extent is global and goes beyond the influence of local dealers and cultures. Moreover, an understanding of the brand is suggested to be indispensable in analysing push-pull mechanisms. While pull systems are associated with higher channel efficiency, the study suggests that pull systems are unlikely to work for volume brands: high manufacturing overcapacity is beyond the influence of individual manufacturers, thus industry overcapacity forces volume brand manufacturers to push cars to the market. Premium brands, with demand in reasonable balance with supply, may restrict the use of push systems without losing sales volume. © 2007 Elsevier Ltd. All rights reserved.
Place, publisher, year, edition, pages
2008. Vol. 15, no 4, 250-265 p.
Car distribution; Premium brand; Volume brand; Automobile industry; Industry overcapacity; Distribution strategies; Multi-franchising; Channel ownership; Dual distribution
IdentifiersURN: urn:nbn:se:liu:diva-40356DOI: 10.1016/j.jretconser.2007.05.006Local ID: 53114OAI: oai:DiVA.org:liu-40356DiVA: diva2:261205