Session 7 Flashcards
The power of retailers
Only trademark that recurs throughout the store
They have control over competitive landscape and point of sale
Guaranteed good shelf placement
In a zero-sum world, increasing sales for manufacturer brand implies
decreasing sales for private label
Customer = Competito
Reduce price? Break-even analysis
How muhc more will have to sell to break even on 10% reduction in their retail price
10% price reduction requires 71% increase in sales volume!!
Reduce price?
Why?
60% of consumers mentions price as most important attribute
55% of consumers report checking the price before making a purchase
Why not?
Required increase in sales volume to break even may not be realistic,
unless you can:
Reduce COGS (reduce size of roll or sheets)
Price discriminate
Reduce perceived price (e.g., offer super-sized value packs with higher unit price)
May dilute Renova brand
May harm relationships with retailers
Make private label?
Why?
* Private labels are here to stay. Better get a share.
* Could improve relationships with retailers.
* Renova brand is unknown in many countries.
* Economies of scale and use of spare capacity.
* Why not?
* Inconsistent with brand and company reputation.
* Difficult for any company to be good at two different games.
* Private labels perhaps reached saturation point?
* Easy to replicate.
Innovate?
Why not?
* Quality is second most important attribute according to marketing
research
* Private labels are increasingly matched in terms of quality
* High costs in low-margin product category
* Easy to replicate
* How?
Renova – Key learnings
- Recognize the limitations of traditional marketing research.
- “Laddering”: Think beyond functional attributes such as price and quality.
Renova added experiential and symbolic benefits to toilet paper. Renova
does not sell toilet paper. It sells wellbeing and decoration. - The power of brand awareness. Get yourself noticed
