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Marketing Strategies for a Store Brand: The Wegmans Store Case study Prakash K


Wegmans Snapshot • • • • • •

A regional supermarket chain 79 stores in NY, NJ, PA, VA and MD Founded 1916 by Walter Wegman Family business CEO is Danny Wegman 37,000 employees


Consumer • • • •

Affluent and upper middle class Men & women Adults, teenagers and senior citizens Sensitivity to price – Situational self relevance – Value driven

• Year round shoppers


Medium

Farmers Markets

Low

Brand Image

High

Competitive Landscape

Low

Medium

High

Range of competitive* product offerings


Working Relationships • National Brand name manufacturers • Private Label Manufacturers • Farmers and distribution agencies – In United States – Asia – Europe


The Landscape • Wegmans store brand products compete with national brands • Wegmans has low pricing power for a wide variety of consumer goods • Supermarkets in Europe have had greater success with store name brands • Can Wegmans replicate their success? • If so, how? If not, why not?


% Price premium of NB over SB

159 126 125 91 70

9

17 19

27

-15 Milk

Meat Product

Eggs

Orange Juice

Cheese

36 38

Cut Veg

48 50 50 52

Cereal

Salt

Soda

Batteries

Bottled water Salted Butter

Ice Cream Potato Chips

Mouth wash Oil spray


Consumer Purchase Behavior • Depends on consumers attitude towards Store brand (SB) product • Depends on customer attitude towards the store • Cultural factors and affinity for brand items • Impressions specific to the product – Aversion towards SB increases with increased risk of negative consequences


Relative importance of various aspects

Attributes

Brand Image

Product Quality

Price


Evidence from Research

1-4

For a national brand (NB), non blind taste score will be significantly higher than for store brand (SB)

Store should not rely solely on SB sales revenue

National brands typically do not participate in price wars with SB. Energy of NB better spent in differentiation

SB market share increases significantly during times of economic distress


Evidence from Research

National Brand Quality Store Brand Quality

1-4


Evidence from Research

↑Customer

involvement

↑Customer Loyalty

Improves Store Brand Equity

Improve customer experience

1-4

Increases pricing power of store brand*

Text * Customer loyalty allows price increase without negative consequences


Pricing Strategy for low involvement Products Strengthen SB name

Maintain PR & activities

Increas e market share

Quality Close price gap with NB


Pricing Strategy for other Products

Negotiate price with NB

Maintain

Improve margin

Customer satisfaction

Maintain portfolio of SB

Tune SB, NB product mix


References 1. Brand Vs Private Labels, Fighting to Win; Harvard Business review, Feb 1996 2. Consumer perceptions of store brands versus national brands, Journal of Consumer Marketing, Vol 22, Nov 2005 3. Private Label Brand Image and its relationship with store image and national brand; IRJDM Vol 34, Issue 1 4. Market share and price setting behavior of Private Labels and national brands; Review of Industrial Organization, Vol 17, 2000

Wegmans pricing strategy  

This slides tries to understand how the wegmans superstore prices its products

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