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Understanding the Relationships
Among Brands, Consumers,
and Resellers
Frederick E. Webster, Jr.
Dartmouth College
This article examines the historical evolution of the rela- (retailer) brands account for as much as 70 percent of sales
tionships among brands, consumers, and resellers in a in some categories (Carpenter and Tybout 1998). The
world increasingly dominated by very large retail organi- implicit assumption is that manufacturers (i.e., national
zations with substantial power within the marketing chan- brands) and retailers compete for consumer loyalty in a
nel It is widely believed that manufacturers brands are zero-sum game. Supposedly, as large retailers gain power,
becoming less important as major retailers are becoming they are able to increase their margins, keeping more of the
more powerful. This view is based on the mistaken assump- consumer surplus created by the attractiveness of manu-
tion that brands are relationships with consumers, not re- facturers brands in their stores, while manufacturers mar-
sellers. Arguments about the decline of brands are often gins deteriorate. The retailers keep some of this surplus for
confused with arguments about changes in the brand man- themselves and pass some onto their end user customers.
agement function. As majorfirms redefine their customer In sum, retailers and consumers gain, while national brand
as the reseller, not the consumer, there are substantial im- manufacturers lose as large retailers gain more power and
plications for brand management and the role of the brand control in the marketing channel.
manager. Marketing strategy implementation will require Consumers obtain more value in the form of lower
increasingly careful coordination of marketing
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