Pricing: Multiple Bands, Multiple Prices

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.   

Read full article (in spanish).

More on this topic

Rise of Own Brand Labels in Peru

April 2015

Eight in ten Peruvians buy own brand label products, with bread, rice and oil having the most presence in supermarkets

From a statement issued by the Costa Rican Foreign Trade Promotion Office:

Peruvians prefer to shop in supermarkets, because of the variety of products on offer , as well as for reasons of safety and comfort.

Own Brands in Panama

March 2015

Supermarkets are one of the outlets where the most own brand labels can be found, and these products are gaining ground as consumers perception over their quality improve.

Currently in Panama 2% of supermarket sales correspond to own or private brand labels and 64% to cheaper brands, according to studies cited by Martesfinanciero.com.

Rise of the Private Label in Europe

December 2012

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.

Supermarkets Increase use of House Brands

July 2009

Focused on basic grains, groceries, cleaning products and convenience products, house brands keep growing.

The consumer receives a price that is 10% to 20% cheaper than similar quality products branded by independent providers.

This lower price is achievable mainly because house brands products are not actively marketed.

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