National brands versus store brands: retailer fight against national brands to improve store brands via a dynamic discount pricing strategy

Today, there is a lot of competition between competitors in the market of different products. The level of complexity of relationships and behavior of active players in the market has also increased. So that a manufacturer and retailer work together to increase the profit of the supply chain through the sale of products. On the other hand, the retailer and the manufacturer as competitors are competing with each other to sell more of their products. This issue has increased the complexity of the relationship between retailers and manufacturers. This study aims to explore how retailers can strengthen the self-introduced store brand (SB) and resist the pressures of manufacturers by using dynamic discount pricing (DDP) strategy. Numerical examples are proposed to clearly explain the validity and applicability of the model. Based on the managerial insights developed by analyzing the model's results, we evaluated the influences of DDP strategy on the retail prices and demands of national brands (NB) and SB and the profit of the retailer and the manufacturer. We found that discounts on the manufacturer's product by the retailer increase the demand for both NB and SBs. An increase in demand leads to an increase in the profits of manufacturers and retailers. However, the increase in the manufacturer's profit does not compensate for the decrease in his market share. In other words, the introduction of an SB always causes damage to the manufacturer, but the amount of damage depends on various factors. These findings offer manufacturers and retailers useful insights and help them adopt effective marketing strategies.