Explain private brand strategy of a retailer?

Answer 1

# What is private brand? Explain private brand strategy of a retailer Private brandsPrivate brands are also called as store brands. These brands bearing the store name or store selected vendor name. Basic ingredients of private labels are 1. It must be a unit package: It is difficult to assign a Private Label character to, say rice sold loose from a 100 kg bag. Even though it may enhance consumer loyalty for whatever reason, it does not qualify as a Private Label product. 2. Relabeling: The unit pack must bear only the brand name of the particular store or any other party the store may choose for its Private Label programme. Private labels will enhance the category profitability; Increase the negotiation power of the retailer and better value creates better consumer loyalty. All retailers cannot go for the private labeling. Private labels can be introduced if and only if a. The consumer is not getting the tangible value. b. The retailer is not making the enough returns from the sale of the branded goods. Emerging issues in private labeling: 1. The private label strategy is effective, profitable and reality. 2. The retailer must understand the price, quality and willingness to pay. 3. The retailer must have a sufficiently large base of loyal customers in the store before introducing the private label. 4. The focus must be on consumer need and not any private agenda of the retailers 5. There must be stringent system for the private label production. Quality control is a must since there is no else to blame. 6. Private label must work to fill-in gaps in the category and not target the brand leader 7. Smart manufacturers may take a private label initiative of the retailer seriously and avoid value gaps in the categories as an impediment to growing private labels. Private branding is when a large distribution channel member (usually a retailer), buys from a manufacturer in bulk and puts its own name on the product. This strategy is only practical when the retailer does very high levels of volume. The advantages to the retailer are: * more freedom and flexibility in pricing * more control over product attributes and quality * higher margins (or lower selling price) * eliminates much of the manufacturer's promotional costs The advantages to the manufacturer are: * reduced promotional costs * stability of sales volume (at least while the contract is operative) For Example 1: Kroger Value: Lower tier brand; formerly known as For Maximum Value and Cost Cutters even before that. This tier is also labeled bilingually in English and Spanish.

Kroger: Middle tier brand

Private Selection: Upper-scale brand; this is targeted towards customers looking for better quality rather than lower prices. For Example 2: In October 2005, Wal-Mart announced it would implement several environmental measures to increase energy efficiency In March 2006, Wal-Mart sought to appeal to a more affluent demographic. The new store has wood floors, wider aisles, a sushi bar, a coffee/sandwich shop with free Wi-Fi internet access, and more expensive beers, wines, electronics, and other goods. The exterior has a hunter green background behind the Wal-Mart letters, similar to Wal-Mart Neighborhood Markets, instead of the blue previously used at its supercenters. On September 12, 2007, Wal-Mart introduced new advertising with the slogan, "Save Money Live Better," replacing the "Always Low Prices, Always" slogan, which it had used for the previous 19 years On June 30, 2008, Wal-Mart unveiled a new company logo, featuring the non-hyphenated name "Walmart" followed by a stylized spark, as it is referred to on store advertisements. The new logo received mixed reviews from some design critics, who question whether the new logo is as bold as competitors such as the Target bullseye or as instantly recognizable as the former company logo, which was used for 18 years