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Chapter 11.pdf

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Ryerson University
Retail Management
RMG 200
Ken Wong

Chapter 11 Branding Strategies - Manufacturer brands/national brands  are products designed, produced and marketed by a vendor and sold to many different retailers  Manufacturer is responsible for developing the merchandise and establishing an image for the brand  Stocking national brands may increase or decrease store loyalty  Advantages:  More desired by customers  Resell excessive merchandise  Don’t need skills and people to develop and promote merchandise  Disadvantages:  Lower gross margins than private-label brands (due to the manufacturer assuming the cost of promoting the brand and increased competition among retailers selling these brands)  Vulnerable to competitive pressures  Limit retailer’s flexibility – vendors of strong brands can dictate how their products are displayed, advertised and priced - Licensed Brands  The owner of a well-known brand name (licensor) enters a contract with a licensee to develop, produce and sell the branded merchandise  The licensee may be either the retailer that contracts with a manufacturer to produce the licensed product or a third party that contracts to have the merchandise produced and then sells it to the retailer – Quality issue  Licensed brands’ market share has grown increasingly large - Private-Label Brands/Store brands  Products developed by a retailer and available for sale only from that retailer  Retailers typically develop specifications for the merchandise and then contract with manufacturers who are often located in countries with developing economies to produce the products  Private labels enhance store image if the brands are of high quality and fashionable  The retailer will be responsible for promoting the brand  Advantages:  Unique merchandise not available at competitive outlets  Difficult for customers to compare price with competitors  Higher margins  Disadvantages:  Need to develop expertise in developing and promoting brand  Unable to sell excess merchandise  Typically less desirable for customers  Retailers must make significant investments to design merchandise, create customer awareness and develop a favourable image for their private-label brands  If the private-label merchandise doesn’t sell, the retailer can’t return the merchandise to the manufacturer - Private-label Options  Generic or house brands – targets a price-sensitive segment by offering a no-frills product at a discount price  Unbranded, unadvertised merchandise is found mainly in drug, grocery and discount stores  Perceived by the consumer to be of lower quality and its packaging identifies it as a brand of the retailer  Premium Branding – offers the consumer a private label at a comparable manufacturer- brand quality, usually with modest price savings  The premium brand attempts to match or exceed the product quality standard of the prototypical manufacturer brand in its category.  No intention to duplicate the packaging or to trade off the brand equity of a particular manufacturer brand  Copycat branding – imitates the manufacturer brand in appearance and packaging generally is perceived to be of lower quality and is offered at a lower price  Risky private-branding alternative because close copies can violate packaging and patent laws  Poor copies are ineffective  Parallel Branding – represents private labels that closely imitate the packaging and product attributes of leading manufacturer brands but with a clearly articulated “invitation to compare” in its merchandising approach and on its product label  Seeks to benefit from the brand equity of the manufacturer brand by closely imitating the national brand’s packaging and product qualities  Leveraging strategy used to bolster a retailer’s private-brand sales  Attempt to produce a product and packaging so similar to the manufacturer brand that the only noticeable difference between the two is price  Exclusive co-brands - Developed by a national brand vendor, often in conjunction with a retailer, and sold exclusively by the retailer Why have these manufacturers chosen to become retailers? - By becoming retailers they have total control over the way their merchandise is presented to the public – unified strategy - They can use these stores to test new merchandise and merchandising concepts - Based on these tests’ results, they can better adv
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