The Moderating Roles of Relationship Quality and Dependency in Retailers New Product Adoption Decisions

Abstract

This study contributes to the retail adoption literature by explicitly focusing on the role of both profit-related and relationship variables in explaining new product adoption decisions by retailers, instead of considering either one of these groups of variables in isolation as has been done by previous retail adoption studies. Moreover, it specifically addresses how both relationship quality and a retailers dependence on the manufacturer moderate the effect of profit drivers. Using a sample of 392 new product adoption decisions by four Dutch retailers, the authors estimate a random effects logit model to explain adoption decisions. The results show significant positive main effects of gross margin, consumer support, product uniqueness, relationship quality and the retailers dependency on the manufacturer on the adoption decision. Moreover, the authors find that improved relationship quality tends to reduce the importance of both gross margin and consumer support in the adoption decision process, but surprisingly leads to a stronger impact of trade support. The moderating effect of the retailers dependence on the manufacturer also differs between profit drivers, such that it decreases the positive impact of gross margin, consumer support and product uniqueness, and it increases the negative effect of store brand cannibalization.

Keywords: adoption, power, store brands, relationship marketing, logit model, retail

JEL Classification: C44, M31, M