Advantages And Disadvantages Of Private Own Labels

During the second half of our trading period we focussed massively on the private label market and found our niche there. We had realized that the minimum cost of the product wins the market share so we started experimenting with S/Q Ratings and percentage of superior materials to come up with the best product with the least cost price. Adding minimum profit margin to the cost price we were able to seize a massive chunk of the private label market. Attached are a few snapshot highlighting our success in that market.

Attracts customers with other preferences and may compete broadly in the industry by branching out in new locations

This left a segment open for new entrants to come with no competition from incumbents.  Private labels also did not do product proliferation and were focused on limited popular brands at low costs. This helped them save costs in R&D of new products and also save costs by not experimenting new products. They did not compete with the Big 3 on all possible niches. Also, from the table below, we see that the total costs of the private label are 40% less than the Big 3 brands, which helped them to target the price sensitive customers. They are several strategies that the private labels applied which resulted in reduced cost structure. First of all, they did not use coupons, which had accounted for 23% of the total costs for Big 3 brands. The private label also offered higher margins to retailers (15%) in comparison to Big 3(12%) in order to get premium shelf space and signage. The private labels reduced packaging costs by supplying cereals in clear plastic bags. They also used less labor intensive manufacturing process and fewer expensive fruits and nuts.

It’s an effective way to speak directly to the customers’ needs, while offering them the right product solution.

for style and functionality product. Over 150 independent retail stores has been owned with the

It also makes customers aware that the stores have the same products wherever they go. (http://corp.7-eleven.com) This is one of the good parts; every store one goes to has the same interior and exterior, and promotions. They set the register by the store entrance so they can welcome their customers that promote great customer service. 7-Eleven has always founds ways to satisfy customer needs, because the one thing that is unique about the company is it is one of the best at customer service. When a customer enters the store, they expect a fast, friendly service. In to meet customer’s expectations the employees who work at the store or corporation; 7-Eleven introduced CDC, which means Combined distribution Centers to help manage the flow of products, that are in the store. (http://corp.7-eleven.com) They have also started using DSD, which is Door Store Delivery. (http://corp.7-eleven.com)This helps distributing the delivery of the products to the store. DSD gives better information on deliveries and a better control on supply chain. Another system that is useful is POS, which stands for Point of Profit Sales. (http://corp.7-eleven.com) The franchisees and the field consultant use theses to have a better understanding on which products need improvement and the product cycle. It also helps them with the order process of the product

ensure that the company stays current and ensures that there will be a wider range of consumers shopping in-store, resulting in higher sales volumes and sales revenue generated.

To fully understand what this particular term means, it is necessary to first and foremost define the first two words: private label. In the simplest definition, a private label is a brand that is owned neither by a producer nor a manufacturer but rather by an individual or business entity that contracts a manufacturer to make the said branded product for

Which improve overall shopping experience with the same brand and it can strengthen a relationship with customers. This is also an important part of it’s competitive strategy and fulfilling customers’ need. Thus, it’s

Twenty plus years ago, the terms “private label” or “own brand” were usually synonymous with “cheap knock offs.” These products were viewed as inferior to the national brands and just a low cost alternative for the extremely price conscious. However, in the last 20 years, the paradigm has changed. As major retailers sought ways to expand their brand and entice customers to become loyal to their stores, private label (“PL”) and own brand (“OB”) products became a more viable and significant component of their marketing and brand strategy. However, this came with the caveat that their PL/OB offerings had to meet or exceed the quality of the national brands but at a price point of 10-20% less.

There is research that shows half of shoppers bypass their closest store, typically for the lower prices. Kroger offers many private label products and keeps the prices low (Hartman group). They are able to sell at relatively low prices and still generate good financial return based on their cost structure. According to this marketing strategy, they attract and retain more customers. Kroger has private products and the customers more and more tend to buy value oriented merchandise. It will increase the demand for private label goods in the U.S. Kroger has three kinds of private label product--Private Selection, Banner Brand, and Kroger value to satisfy different customer’s requirements. Private selection is a premium quality brand, banner brand focus on taste and efficacy, and Kroger value is designed to deliver quality products and sell those at an affordable price (Bell).

The essay reveals the concept about the importance of labeling and packaging in marketing. Packaging and labeling is the methodology of enfolding and savings the items from storage, shipping and for future utilization. Customer while purchasing the product consider the quality of the product, but apart from that also put attention

The industry within which Hansson Private Label exists is a very competitive and volatile one. It is dominated by two types of firms, namely, Branded and Private Labels. Tucker Hansson operates as a private label firm. Private Label firms are an emerging market which is competitive based on its ability to have a lower price than its rivals. This market has experienced growth primarily because of this affordability. However this growth would be regarded as organic.

Proximity to raw materials gives benefits on distribution channel which is already organized by formers. This also gives an added advantage in reducing transportation costs

The Big 3 had high advertising to sales ratios of 10-14%, also deterring entry, because average first year advertising cost for a new brand was over $20 million. We can conclude that total costs related to producing private label products are lower than new branded products. Private label products can offer greater margins to grocers and still sell at lower prices. They have a considerable competitive cost advantage over the new branded products.