Outsourcing or not? OEM's entry decision considering brand spillover effect

Author:

Ke HuaORCID,Zhou YaqinORCID

Abstract

PurposeIn this paper, the authors study the entry and outsourcing strategies of manufacturer while considering the brand spillover effect resulting from outsourcing. The supply chain comprises two manufacturers: one being the entrant with a strong brand, and the other as the incumbent with a weak brand. The entrant decides whether and how to enter the market.Design/methodology/approachStackelberg game is applied to study the optimal strategies for the manufacturers. This paper conducts a comparative analysis on four situations, yielding conclusions and managerial insights.FindingsThe results show that, for the entrant, there is no need to worry about the brand spillover effect in the outsourcing process, which is very interesting and counterintuitive. To get further, the authors find the reason: The spillover effect causes the entrant’s equilibrium retail price to grow faster than the wholesale price. They also prove that a stronger brand effect empowers the entrant to challenge industry barriers, while the impact of the brand spillover effect is the opposite. For the incumbent who acts as the weak party in this issue, it is demonstrated that the optimal choice is to continue selling when facing the encroachment and outsourcing call from the entrant.Originality/valueDiffering from previous studies, the authors notice the brand spillover effect caused by outsourcing when studying company’s entry strategy. They further divide the brand effect into two parts, one of which does not exhibit a spillover.

Publisher

Emerald

Reference61 articles.

1. The effect of deceptive brand image on consumer purchase intention: empirical evidence from iraqi market;The Journal of Asian Finance, Economics and Business,2022

2. The differential roles of brand credibility and brand prestige in consumer brand choice;Psychology and Marketing,2010

3. Brand building to deter entry and its impact on brand value;Management Science,2023

4. The influence of product variety on brand perception and choice;Marketing Science,2007

5. The role of brand image and product characteristics on firms’ entry and OEM decisions;Management Science,2016

同舟云学术

1.学者识别学者识别

2.学术分析学术分析

3.人才评估人才评估

"同舟云学术"是以全球学者为主线,采集、加工和组织学术论文而形成的新型学术文献查询和分析系统,可以对全球学者进行文献检索和人才价值评估。用户可以通过关注某些学科领域的顶尖人物而持续追踪该领域的学科进展和研究前沿。经过近期的数据扩容,当前同舟云学术共收录了国内外主流学术期刊6万余种,收集的期刊论文及会议论文总量共计约1.5亿篇,并以每天添加12000余篇中外论文的速度递增。我们也可以为用户提供个性化、定制化的学者数据。欢迎来电咨询!咨询电话:010-8811{复制后删除}0370

www.globalauthorid.com

TOP

Copyright © 2019-2024 北京同舟云网络信息技术有限公司
京公网安备11010802033243号  京ICP备18003416号-3