By Steve Tracey📧 and Kusumal Ruamsook📧
In Supply Chain Management Review, November, 2023.
A major shift in the focus of branding has occurred in the last two decades. Traditionally, brands were associated with products, and consumers purchasing the products were often unaware of the company behind them. Today, a growing number of companies place greater emphasis on corporate brands and corporate-dominant brand architecture as a means to navigate the competitive and hyperconnected market environment. Boosted by the e-commerce boom, supply chain management has risen to the forefront of retail branding strategies. This article discusses how distribution and logistics are revolutionizing corporate branding strategies in the retail sector, going beyond the enabler of brand promises delivery to be an extension of the retailer brand.
View the full article from the publisher web site here.
Related CSCR White Paper:
Read “The Evolutionary Nexus of Supply Chain and Corporate Branding in Retail” here.
A major shift in the focus of branding has occurred in the last two decades. Traditionally, brands were associated with products, and consumers purchasing the products were often unaware of the company behind them. Today, a growing number of companies place greater emphasis on corporate brands and corporate-dominant brand architecture as a means to navigate the competitive and hyperconnected market environment. 
We investigate analytical and empirical properties of the Heteroscedastic Exponomial Choice (HEC) model to lay the groundwork for its use in theoretical and empirical studies that build demand models on a discrete choice foundation. The HEC model generalizes the Exponomial Choice (EC) model by including choice-specific variances for the random components of utility (the error terms). We show that the HEC model inherits some of the properties found in the EC model: closed-form choice probabilities, demand elasticities, and consumer surplus; optimal monopoly prices that are increasing with ideal utilities in a hockey-stick pattern; and unique equilibrium oligopoly prices that are easily computed using a series of single-variable equations. However, the HEC model has several key differences with the EC model, which show that variances matter: the choice probabilities (market shares) as well as equilibrium oligopoly prices are not necessarily increasing with ideal utilities; and the new model can include choices with deterministic utility or choices with zero probability. However, because the HEC model uses more parameters, it is harder to estimate. To justify its use, we apply HEC to grocery purchase data for 30 product categories and find that it significantly improves model fit and generally improves out-of-sample prediction compared with EC. We go on to investigate the more nuanced impact of the variance parameters on oligopoly pricing. We find that the individual and collective incentives differ in equilibrium: firms individually want lower error variability for their own product but collectively prefer higher error variability for all products—including their own—because higher error variability softens the price competition.
We investigate analytical and empirical properties of the Heteroscedastic Exponomial Choice (HEC) model to lay the groundwork for its use in theoretical and empirical research that build demand models on a discrete choice foundation. The HEC model generalizes the Exponomial Choice (EC) model by including choice-specific variances for the random components of utility (the error terms). We show that the HEC model inherits some of the properties found in the EC model: closed-form choice probabilities, demand elasticities and consumer surplus; optimal monopoly prices that are increasing with ideal utilities in a hockey-stick pattern; and unique equilibrium oligopoly prices that are easily computed using a series of single-variable equations. However, the HEC model has several key differences with the EC model that show variances matter: the choice probabilities (market shares) as well as equilibrium oligopoly prices are not necessarily increasing with ideal utilities; and the new model can include choices with deterministic utility or choices with zero probability. However, because the HEC model uses more parameters, it is harder to estimate. To justify its use, we apply HEC to grocery purchase data for thirty product categories and find that it significantly improves model fit and generally improves out-of-sample prediction compared to EC. We go on to investigate the more nuanced impact of the variance parameters on oligopoly pricing. We find that the individual and collective incentives differ in equilibrium: Firms individually want lower error variability for their own product, but collectively prefer higher error variability for all products – including their own – because higher error variability softens the price competition.
