Essay about Hansson Private Label, Inc Case Analysis

1520 Words Oct 26th, 2011 7 Pages
Overview of the Industry

As a manufacture of private label personal care products, Hansson Private Label, Inc. has a considerable amount (28%) of market share in its specific industry. However, private labels as a whole constitute less than 19% in the entire personal care industry. Therefore, growth of HPL depends on the growth of the industry and more importantly the growth of private label component within the industry. In terms of the personal care industry, market growth will not improve significantly in the future. As proven in the past four years, unit volumes in the industry increases less than 1% in each year and the dollar sales growth was only driven by modest price increases. Therefore, the opportunity for private labels
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As seen in exhibit 2 as well, the company’s unit share and dollar share steadily increased minimally from 2005 to 2007. Unit share increased from 21% to 21.3%, while dollar share increased from 15.7% to 16.1%. Similarly, US sales increased in HPL’s Target Markets for skin care, oral hygiene, personal hygiene, and hand and body care from 2003 to 2007, making the package more appealing to the company. With HPL’s sales into its retail channels increasing from 2003 to 2007, in addition to the increase in sales, label shares, and such aspects as revenue, it is evident that the company’s financial performance for the past few years has been favorable.

Need for Expansion

HPL benefits from the private labels as a whole gaining competitive advantages over brand names. Its more pertinent competition, however, will come from its private label peers. A 28% market share among comparable companies has not yet made HPL a private label personal care industry leader. The opportunity of locking in a strong relationship with a large retailer will provide HPL the opportunity to significantly increase its market shares and also the possibility of becoming the industry leader.
The expansion plan calls for a $50 million investment in production capacity to accommodate the future demand of the retailer. Considering that all of HPL’s four plants are already operating at

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