Private label is driving performance challenges for both suppliers and Supermarkets. Weak approaches or undisputed assumptions around these challenges can result in detrimental long term decisions for supplying businesses.
One resounding assumption is that the strength of brands can withstand the onslaught of Private and Grocery labels. Coca Cola share fell to 33% from 63% in UK Sainsbury’s stores as can be seen in the article http://supermarketnews.com. The Australian Coca Cola CEO on ABC’s “The Business” interview in 2012; mentions that consumers still prefer their branded product and noting the importance of keeping branded product “affordable”. The CEO’s comments at that point in time could be seen as an accepted reduction in brand equity to combat grocery brands.
It is crucially advantageous to quantify shifts in relative brand equity with the positioning of a private label product. This helps you revise your brand strategy. In the short term (whilst your brand continues to exist) research helps you avoid either charging too little (profit loss) or charging too much (accelerate share loss/be taken off shelf). As a supplier, setting your price incorrectly high can also have detrimental effects on profits in attempting to navigate a lower shelf price with your customers.
Whilst in the long term, survival of your brand is significantly more complex than a simple pricing exercise. To correctly reposition your brand strategy requires sound analytical backing; one component of these analytics is pricing market research. The article “Is Price Market Research A Waste of Valuable Marketing Dollars?”, I hope generates discussion toward delivering your organisation more effective market research.