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Brand Management ,Some of the major brands supply products to be used for private labels in addition to their own products. This approach is often labelled as if you cant beat them, join them strategy. This strategy, however, is heavily criticize Essay Example

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Brand Management ,Some of the major brands supply products to be used for private labels in addition to their own products. This approach is often labelled as if you cant beat them, join them strategy. This strategy, however, is heavily criticize

For a company with major brands, some with premium prices that are justified through decades of effective marketing promotion, having lower-cost alternatives available in an established market poses considerable potential risk. It is estimated that private labels are generally, on average, priced at a rate 21 percent less than comparable major brands (Batra and Indrajit 2000). Hence, marketing experts could be correct that this dual-producing strategy could be detrimental to achieving sales success for major brands. In an environment where the post-recession consumer is scaling back premium-priced purchases in favour of frugality, consumers might flock to the private label brands and consume less of the firm’s major brands. Whilst the firm would theoretically achieve greater sales of its private label products, the higher-priced name brand products would provide much greater revenues if the sale of the major brands outpaced private label sales.Does it make logical sense for a company to compete with itself by providing private label and major branded products? Hoch and Banerji (1993) appear to think so, believing that customers measure perceived high quality in greater proportion to price when making the decision to select private label or major brands. Private label products must adhere to quality assurance systems and government-imposed regulations (especially in terms of food-related safety), therefore these private label products are comparable to major brand product quality. Private label brands, today, are articulated in such a fashion to give consumers a quality-oriented brand proposition which serves as a predictor for future repurchases of the private label products. Steenkamp, van Heerde and Geyskens (2010) assert that many of today’s private label brands are being promoted at the higher stratum of total product quality.However, De Wulf, Odekerken-Schroder, Goedertier and Van Ossel (2005) conducted an empirical study and found that the majority of consumers believed that name brands were of higher quality than private label products. However, in this same study, it was discovered that private label quality was judged higher than comparable name brands in blind taste testing experiments (De Wulf, et al. Therefore, perceived quality from a social perspective would seem to favour the name brand over that of the private label. However, since consumers favoured the

References

Ashley, M.J., 2014 Private label (generic) vs. branded products: differences aren’t black and white anymore. AAM Insurance Investment Management. Available through: < http://www.aamcompany.com/private-label-generic-vs-branded-products-differences-arent-black-and-white-anymore/> [accessed 18 November 2014].

Batra, R. and Indrajit, S., 2000 Consumer-level factors moderating the success of private label brands. Journal of Retailing, 76(2), pp.175-191.

Coriolis Research, 2004 Tesco: a case study in supermarket excellence. Available through:

<http://www.coriolisresearch.com/pdfs/coriolis_tesco_study_in_excellence.pdf> [accessed 16 November 2014].

De Wulf, K., Odekerken-Schroder, G., Goedertier, F. and Van Ossel, G., 2005 Consumer perceptions of store brands versus national brands. Journal of Consumer Marketing, 244, pp.223-232.

Flatters, P. and Willmott, M., 2009 Understanding the post-recession consumer. Harvard Business Review, July. Available through: <https://hbr.org/2009/07/understanding-the-postrecession-consumer/ar/1> [accessed 29 October 2014].

Hamstra, M., 2009 Whole Foods improves image. Supermarket News, 57(20).

Hoch, S.J. and Banerji, S., 1993 When do private labels succeed? Sloan Management Review, 34(4), pp.57-67.

McDougall, A., 2011 Innovation vital to change post-recession consumer behaviour, Mintel, Cosmetics Design Europe. Available through: <http://www.cosmeticsdesign-europe.com/Market-Trends/Innovation-vital-to-change-post-recession-consumer-behaviour-Mintel/> [accessed 7 November 2014].

Steenkamp, J., van Heerde, H. and Geyskens, I., 2010 What makes consumers willing to pay a price premium for national brands over private labels? Journal of Marketing Research, 47(6), pp.1011-1024.

Sudhir, K. and Talukdar, D., 2004 Does store brand patronage improve store patronage? Review of Industry Organization, 24(2), pp.143-159.

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preview essay on Brand Management ,Some of the major brands supply products to be used for private labels in addition to their own products. This approach is often labelled as if you cant beat them, join them strategy. This strategy, however, is heavily criticize
  • Pages: 6 (1500 words)
  • Document Type: Essay
  • Subject: Marketing
  • Level: Undergraduate
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