Private-label products sell in supermarkets typically for about 10 to 20 percent less than national brands, yet the profit margins realized by supermarkets are usually about 10 to 15 percent higher than for national brands—so, supermarkets like private-label brands. But in recent years, there has been a tendency for supermarkets to upgrade their private brands to compete more directly with high-price premium national brands on quality. Several supermarkets, for example, have developed their own version of the Dove super premium ice cream bar. Some observers believe that such trading-up of private-label products will undermine their appeal. Do you agree or disagree? Explain why.
Answer to relevant QuestionsThe basic factors to consider in developing pricing strategies are market variables, internal cost and competitive forces. Do you agree or disagree? Explain. Explain the concept of “buying distribution services” as it applies to channel pricing strategy. Apple CEO Steve Jobs has been quoted as saying: “We don’t know how to build a sub-$500 computer that is not a piece of junk.” Job’s disdain for the under $500 price point for personal computers reflects his belief ...Why is the success of a manufacturer’s overall promotional strategy dependent to a significant extent on channel member cooperation? Sales through department stores account for about one-third of the $170 billion world market for cosmetics. One of the major reasons— perhaps the most important reason—for department stores’ ability to hold their own ...
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