Own Branding (Part III)

Advantages of Own Branding for Suppliers:

Excess production capacity can be utilised
Own brands help absorb fixed costs
The retailer has an equal interest in selling the goods
Some warranty liabilities may transfer to the retailers

Disadvantages of Own Branding for Suppliers:

Advantages may be short-lived
Own brands may reduce sales of manufacturer's brands in the same store
Retailers may restrict display and promotion of manufacturer brands to emphasise own brands
Bargaining power is lost as the retailer can usually switch to alternative channels of supply

If anyone would like further examples of the advantages and disadvantages of supplying own brands for retailers, please let me know either via comments or email, and i would do my best to post them as soon as possible.

Own Branding (Part II)

Advantages of Own Brands for Retailer's:

* Image Building / Brand Loyalty

Good value enhances store image
Build relationship of trust and credibility
Control over relationship with customer
Good value builds loyalty to the store and own brand

* Competitive Edge / Extra Turnover

Advantage over competitors with no brand
Offer benefits distinct from competitors
More control of product specification and quality
Allows more retailer-led product innovation

* Higher Profits / Better Margins

Margins tend to be 5-20 percent better
Manufacturers' promotional expenses are avoided
Display space can be manipulated for better returns
Sales can be promoted by placing own brands next to major brands

If anyone would like further examples of the advantages for retailer's having own brands, please let me know either via comments or email, and i would do my best to post them as soon as possible.

Own Branding (Part I)

Drivers of Growth:

• Product Category Characteristics

It is easy to make from commodity ingredients
The product is an inexpensive, low-risk purchase

• New Product Activity

Manufacturer brands are offered in few varieties, so the retail brand offers clear alternatives
Consumers can easily make side-by-side comparisons of manufacturer and retailer brands

• Retailer Brand Characteristics

Distribution is well managed
Consumers have confidence in their ability to make comparisons about quality

• Price and Promotion Factors

Price gaps between national brands and private labels are wide
Retail margins in the category are relatively high

• Retailer Characteristics

The retailer has the size and resources to invest in high quality, own brand development

If anyone would like further examples of the drivers of retail brand growth, please let me know either via comments or email, and i would do my best to post them as soon as possible.

Franchising (Part IV)

Potential Disadvantages for the Franchisor:

Less control over day-to-day operations
Reputation may be damaged by some franchisees
Franchisee motivation may wane over time
Some Franchisees take short-term view
A franchisee may become too powerful
Restricts use of other channels if exclusive geographical area agreed

Potential Disadvantages for the Franchisee:

Turnover and income may not meet expectations
May start to resent restrictions
Less scope for initiative and localisation
Cheaper supplies may be available from other sources
Still paying fees for marketing, even when a loyal customer base is established
As turnover increases, so typically does the fee

Franchising (Part III)

Advantages for Franchisor:

Rapid Growth is possible
Less capital required
Franchisees make highly motivated owner-managers
Lower monitoring costs
Chain can include some directly managed outlets
Scope for internationalisation
Low-risk way to test/develop a market

Advantages for the Franchisee:

Retains some independence
Rewards proportional to success achieved
Less start-up risk
Loans more readily available
Support and advice in setting up and operating
Use of well-known brand name
National/international marketing activity