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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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Companies that produce major, recognised brands often adopt the if you can’t beat them, join them philosophy which underpins the production of private label products for distribution in conjunction with sale of their own name-brand products. There is considerable debate…
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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

Download file to see previous pages... the world’s largest supermarkets, witnessed a 100 percent increase in consumer demand for private label products between 1982 and 2004 (Coriolis Research, 2004). Hamstra (2009) asserts that growth in private label consumption is outpacing major brands by a factor of 300 percent. Furthermore, the post-recession consumer, today, has adopted behaviours related to frugality and thrift which is creating a situation where consumers are willing to trade major brands for lesser-cost private label alternatives (McDougall 2011; Flatters and Willmott 2009). Hence, the socio-economic environment appears to be viable for dual-producing companies wishing to supplement revenue growth by distributing private label products. Hormel Foods sells many successful private label products including desserts, salt substitutes, and canned meats (Ashley, 2014) that compete with its own Dinty Moore, SPAM and Jennie-O major brands. Dual-producing companies believe that because they utilise comparable production equipment in private label production, use similar quality ingredients, and abide by the same stringent regulations, their private label products can achieve consumer loyalty and profitability.
However, when a major brand producer is making private label products, it potentially creates a situation where the producer is competing with itself. Private label brands usually carry a lower price tag, which makes them enticing and relevant for price-sensitive consumers with only moderate consumption resources. 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 ...Download file to see next pagesRead More
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