Implementing online store for national brand competing against private label

We propose a game-theoretic model in three contexts. First, only the national brand (NB) is offered through a traditional retailer. Second, the private label (PL) is introduced by the traditional retailer. Finally, the NBʹs manufacturer opens an online store. We reassess the benefit of introducing the PL and investigate the profitability of implementing an online store. We found that the retailer is not always enjoying the PLʹs introduction. Also, the manufacturer could benefit from that strategy. The quality differential between the NB and the PL, the PLʹs potential and the cross-price competitions are all important factors to determine the result of PLʹs introduction. Hence, the manufacturer opens the online store either to counter the threat of such strategy or to expand his market.