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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


Farmers Markets


Brand Image


Competitive Landscape




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


17 19


-15 Milk

Meat Product


Orange Juice


36 38

Cut Veg

48 50 50 52





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


Brand Image

Product Quality


Evidence from Research


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


Evidence from Research



↑Customer Loyalty

Improves Store Brand Equity

Improve customer experience


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


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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