Differentiation strategies in vertical channels: a case study from the market for fresh produce

Hingley, Martin, Sodano, Valeria and Lindgreen, Adam ORCID: https://orcid.org/0000-0001-7881-7350 2008. Differentiation strategies in vertical channels: a case study from the market for fresh produce. British Food Journal 110 (1) , pp. 42-61. 10.1108/00070700810844786

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Abstract

Purpose – The purpose of this article is twofold: first, to review the literature in order to assess the opportunities and the possible welfare effects of differentiation strategies in the food market; and second, to analyse the current structure and organisation of the fresh produce market (fruit, vegetable, and salad) in the light of new product procurement, innovation, and differentiation policies carried out by retailers at the global level. Design/methodology/approach – The paper used a single dyadic case study across two countries (Italy and the UK): the primary producer is engaged in “partner” supply to a principal category management intermediary for channel leading multiple retailers. Findings – First, equilibrium in differentiated markets is not stable, and a welfare assessment is difficult. Second, a differentiation strategy in the market for fresh produce might benefit retailers more than in other sectors, which seem to be consistent with the theoretical findings. Third, when retailers engage in product differentiation it is more likely that channel relationships shift from collaborative to competitive types, with the power imbalance becoming the disciplinary means by which vertical coordination is achieved and maintained. Research limitations/implications – This article was based on a single case study. Practical implications – For suppliers it could be wise to agree to some inequity as the cost of doing business, especially when smart large retailers carry out successfully competitive strategies with positive spill-over effects on the upstream firms. Originality/value – Using the industrial economic literature on the effects of differentiation strategies (horizontal and vertical differentiation) on market structure, firms' performance, and welfare effects, this paper analyses case findings from a study in the fresh produce industry and will be of interest to those within the field.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HG Finance
Uncontrolled Keywords:	Fresh foods ; Italy ; Product differentiation ; Supply chain management ; United Kingdom
Publisher:	Emerald
ISSN:	0007-070X
Date of First Compliant Deposit:	30 March 2016
Last Modified:	05 May 2023 14:54
URI:	https://orca.cardiff.ac.uk/id/eprint/18127

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