The name is absent

than retailer’ s SL. And the only way to pursue this goal and avoid to be involved into
the risk of delisting is to boost brands through greater investments in advertising and
R&D. By building brand equity, manufacturers can strengthen their brand to such a
level that retailers would have difficulty delisting it. Thus brand equity determines not
only the price- premium that consumers are willing to pay and the manufacturer’ s
bargaining power when negotiating buying conditions with retailers, but also the
retailer’ s delisting decisions.

Retailer
margin

Fig. 2 The Steiner’ s curve and
the delisting mechanism

The main point of Figure 2 is that the mechanism of delisting and the existence of two
distinct regions, in only one of which advertising is effective implies the existence of a
strong threshold effect in addition to the ‘dual- stage’ effects identified by Steiner.

As we have seen above, it is well established that advertising threshold levels influence
the shape of the advertising response function, and thereby affect the optimal
advertising expenditure. In a world with delisting, for a sufficiently high store loyalty,
in addition to the margin- depressing effect captured through the Steiner curve, there
is a further factor at work affecting advertising and R&D effectiveness.

Conceptually, the level of store loyalty defines the minimum level of brand loyalty
required by retailers to list a brand and therefore it determine the minimum level of
advertising and R&D one manufacturer has to undertake to maintain its brand in the
listing region. This means that delisting creates a threshold effect, a level of brand

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