Having a second brand allows companies to reach price sensitive customer segments, without sacrificing profitability in the first brand.
Friday, June 30, 2017
5 Keys to understanding prices for second brands By Ariel Baños, President and Founder of Fijaciondeprecios.com
Why the big price difference between first and second brands? Are they the same, but cheaper?
"Don't pay for the brand," some people say."Don't take risks, chose something safe," say others.Who do you believe?In virtually every product category there are multiple brands to choose from. Many of these options are second brands, ie alternative product lines, with lower prices.In some cases these lines belong to the same manufacturers of the first brands.
Let's look at five key questions in order to understand the differences and similarities.
1. The great price difference In certain cases the price difference between first and second brands can reach up to 50%. What is someone who choses the first brand paying for?Basically you are paying for peace of mind. This difference is the cost of reducing the uncertainty associated with the purchase decision. However, it is by no means a guarantee of higher quality.
During 2018, sales of packaged foods in the United Kingdom exceeded $84 billion, and 36% corresponded to private label products, which have quickly entered this market.
The study "Trends and requirements of private label buyers in the food sector in the United Kingdom", prepared by Procomer Costa Rica, indicates that the United Kingdom stands out as the second country in Europe with greater penetration of private label.
In the retail business, large distributors boost the sales of their own brand products through strategies aimed at consumers who prioritize the price factor over other elements when buying.
Globally, the tendency to buy private label products is becoming more and more evident in markets, as companies engaged in the retail trade of other products, such as supermarket chains, are capitalizing on their experience by placing their own products and competing with their suppliers.
Private label products are still the choice of European consumers to reduce their expenditures in times of crisis.
From a press release by Procomer:
According to the latest report on the Private Label in Europe 2012 from SymphonyIRI Group, a company dedicated to market research, the purchase of private label products is still the choice of European consumers to reduce their spending, while manufacturer brands make efforts to protect their market share.
español
6931
