Interaction between manufacture encroachment and store brand introduction: The roles of sales mode and power structure

To address the issues of impacts of sales mode and power structure on the interaction between manufacturers' encroachment and e-tailers' store brand (SB) introduction, two Stackelberg game (manufacturer-Stackelberg and e-tailer-Stackelberg) model is constructed based on two sales modes, reselling mode and agency selling mode. Taking into account consumers' channel preference, product quality and commission rate to analyze the strategic choices of companies and their strategies interactions in the competition. The results show that the manufacturer's encroachment may be favorable to the e-tailer only in the reselling mode; while the introduction of store brands always hurt the manufacturer. For manufacturer, consumers’ high preference for the direct channel benefits the encroachment; for e-tailer, improving the quality of store brand could deter manufacturers from encroachment, but it may have adverse effects on the introduction of SB. In addition, under reselling mode, the second-mover advantages always exist because follower could endure higher strategy costs than leader, while both the first- and second-mover advantages could exist under agency selling mode. Particularly, under manufacturer-Stackelberg game with agency selling mode, even if the e-tailer moves second, her introduction strategy can prevent manufacturer from encroachment.