Description
The PPT highlighting on H-E-B own brands, a retail case
H-E-B OWN BRANDS
H-E-B V/S. INDUSTRY
? Industry operating on wafer thin margins of
approx. 3 – 6 pct of sales ? H-E-B being an innovative leader clocked sales/store higher then national average ? H-E-B could achieve this due to:Strong commitment to EDLP strategy Better operational efficiency Adherence to consumer value
WALMART’S ENTRY
? Amalgamated its discount mass merchandise
?
?
?
?
store format with grocery store to create SUPERCENTER in ’92 Supercenter stores mushroomed to 888 by ’00 Acted as a source of inspiration for Target and Kmart Created Neighborhood market format to focus on health and beauty items, pharmacy and bakery products EDLP at Walmart is credited to higher purchasing power and supply chain leadership
H.E.BUTT GROCERY COMPANY
Education and hunger relief
CSR Activity
H-EB
Outstand ing customer service
Empower store manager with store philosophy Executives. gained inputs globally
New prods. + Suppl y chain strate gies
H-E-B PILLARS:THE BOLD PROMISE
THE BOLD PROMISE
RETENTION OF GREAT PEOPLE
COMMUNITIES SALES GROWTH Turn ideas into action Maximize each store’s potential Work towards achieving lower costs Earn community trust and respect trough action During crisis take action Share time and resources with neighbours
CUSTOMERS
Providing benefits
Best service Fresh,safe prods. Low price with best value
Recognising contribution Creating flexible work environment Ensuring safe working environment
H-E-B STORE FORMATS
Supermarkets
• Formed 77pct of sales • Provided assortment based on local market needs • Creation of MEAL DEAL to boost topline
Pantry stores
• Formed 16 pct of sales • They operate on a low cost, low price format • With increasing demand, these stores will be translated to H-E-B supermarkets
Central markets
• Total 4 in number and formed 2 pct of the sales • Featured ready-to-eat products • Attracts people within a larger radius • Carried huge collection of wine, beer,cheeses, oils etc…
H-E-B’s OWN BRANDS
? Focused on improved profitability,sales
growth and customer relationship ? Own Brand products offered better margins than national brands ? Captive manufacturing saved costs considerably ? Brand advertising and promotional expenses helped co. to clock higher awareness and ultimately boosting their topline
H-E-B’s PROCUREMENT PLAY
Cost control achieved by tight back-end sourcing
Procurement revenue from vendors of national brands for securing adspace and displays in stores
Alternate source of income in lieu of lower operating margins due to competitive pressure
CHALLENGES FACED BY H-E-B
Balancing Own Brands and National brands Handles ordering, stocking on shelves and taking back of unsaleable products hurts bottomline
Maintaining EDLP is difficult at all times
CHALLENGES FACED
Recommendation for Glacia
Glacia – Road Ahead…
Glacia - Road Ahead
Aim for a Premium Image
Domestic Spring Water
Purified Water Market
Heavy Price Increment
Heavy time and expense in product development and Package redesign
Heavy time and expense in product development and Package redesign
Move Product closer to Evian
Glacia – Competition at a glance
Brand
Ozarka
Cost/Unit Price/Unit Gross Margin % Profit/Unit
$1.46
$1.86
21.5%
$0.40
Glacia
$1.23
$1.79
31.3%
$0.56
Evian
$4.23
$5.49
23.0%
$1.26
Aquafina
$1.90
$2.39
20.5%
$0.49
Glacia – Story of Contradiction
Positioning
• Positioned as Evian’s Competitor ( a Premium Product) • Advertised as a Foreign Spring Water • Promoted as Canadian Spring Water
Position
• Priced next to Ozarka ( a Standard Product) • Placed next to Ozarka – Domestic Spring Water • Placed next to Ozarka – Texas Spring Water
Glacia – Customer View
Wrong Association
• Wrong Product Placement • 64% believed it was from Texas
Low Awareness
• Unaided Recall – 19% • Aided Recall – 74% ( still very low)
• Canada was much less appealing to broader base of water drinker Small Target • Pricing placed the product as par with standard product Group
Glacia – Proposed Solution
Reposition Glacia as Domestic Spring water
Reposition Glacia as Domestic Spring water
Glacia – Domestic Spring Water Advantages
Bottomlime Impact Topline Impact Operational Efficiency Easy to Reposition
• Reduce Logistic Pressure
• Greater Segment of Customer • 44% customer prefer domestic spring water • Since the sourcing is located in proximity, operational efficiency can be achieved
• 64% Americans think it is a domestic brand
HEB OWN BRAND RESPONSE TO COMPETITIVE PRICING
Objective of Own Brand Product Line –
Premium Image
Improved Profitability
Sales Growth
Deeper Customer Relationship
H-E-B Own Brand Lost its premium Image
Consumer perceived Own Brand Product as generally lower quality than national brand
Consumer saw no difference between H-E-B and Hill-Country Fare Brands Product Research Revealed H-E-B did not meet national brand performance H-E-B Own Brand was always suppose to me High Margin Product but due to competitive pressure they lost this. Eg Ice-Cream and Flour
Quest to Regain Lost Ground
• Work to improve the Quality of H-E-B Own Brand Products
Quality
Abandon EDLP
• Difficult to carry Hedonic and Utilitarian Association at the same time, so abandon EDLP for H-E-B Own Brand • EDLP can continue for Hill Country Fare • Realign price to emphasize on Own –Brand Premium Image • Use Hill Country Fare to counter competitors price cut
Reposition it as Premium
?
THANK YOU
doc_723524570.pptx
The PPT highlighting on H-E-B own brands, a retail case
H-E-B OWN BRANDS
H-E-B V/S. INDUSTRY
? Industry operating on wafer thin margins of
approx. 3 – 6 pct of sales ? H-E-B being an innovative leader clocked sales/store higher then national average ? H-E-B could achieve this due to:Strong commitment to EDLP strategy Better operational efficiency Adherence to consumer value
WALMART’S ENTRY
? Amalgamated its discount mass merchandise
?
?
?
?
store format with grocery store to create SUPERCENTER in ’92 Supercenter stores mushroomed to 888 by ’00 Acted as a source of inspiration for Target and Kmart Created Neighborhood market format to focus on health and beauty items, pharmacy and bakery products EDLP at Walmart is credited to higher purchasing power and supply chain leadership
H.E.BUTT GROCERY COMPANY
Education and hunger relief
CSR Activity
H-EB
Outstand ing customer service
Empower store manager with store philosophy Executives. gained inputs globally
New prods. + Suppl y chain strate gies
H-E-B PILLARS:THE BOLD PROMISE
THE BOLD PROMISE
RETENTION OF GREAT PEOPLE
COMMUNITIES SALES GROWTH Turn ideas into action Maximize each store’s potential Work towards achieving lower costs Earn community trust and respect trough action During crisis take action Share time and resources with neighbours
CUSTOMERS
Providing benefits
Best service Fresh,safe prods. Low price with best value
Recognising contribution Creating flexible work environment Ensuring safe working environment
H-E-B STORE FORMATS
Supermarkets
• Formed 77pct of sales • Provided assortment based on local market needs • Creation of MEAL DEAL to boost topline
Pantry stores
• Formed 16 pct of sales • They operate on a low cost, low price format • With increasing demand, these stores will be translated to H-E-B supermarkets
Central markets
• Total 4 in number and formed 2 pct of the sales • Featured ready-to-eat products • Attracts people within a larger radius • Carried huge collection of wine, beer,cheeses, oils etc…
H-E-B’s OWN BRANDS
? Focused on improved profitability,sales
growth and customer relationship ? Own Brand products offered better margins than national brands ? Captive manufacturing saved costs considerably ? Brand advertising and promotional expenses helped co. to clock higher awareness and ultimately boosting their topline
H-E-B’s PROCUREMENT PLAY
Cost control achieved by tight back-end sourcing
Procurement revenue from vendors of national brands for securing adspace and displays in stores
Alternate source of income in lieu of lower operating margins due to competitive pressure
CHALLENGES FACED BY H-E-B
Balancing Own Brands and National brands Handles ordering, stocking on shelves and taking back of unsaleable products hurts bottomline
Maintaining EDLP is difficult at all times
CHALLENGES FACED
Recommendation for Glacia
Glacia – Road Ahead…
Glacia - Road Ahead
Aim for a Premium Image
Domestic Spring Water
Purified Water Market
Heavy Price Increment
Heavy time and expense in product development and Package redesign
Heavy time and expense in product development and Package redesign
Move Product closer to Evian
Glacia – Competition at a glance
Brand
Ozarka
Cost/Unit Price/Unit Gross Margin % Profit/Unit
$1.46
$1.86
21.5%
$0.40
Glacia
$1.23
$1.79
31.3%
$0.56
Evian
$4.23
$5.49
23.0%
$1.26
Aquafina
$1.90
$2.39
20.5%
$0.49
Glacia – Story of Contradiction
Positioning
• Positioned as Evian’s Competitor ( a Premium Product) • Advertised as a Foreign Spring Water • Promoted as Canadian Spring Water
Position
• Priced next to Ozarka ( a Standard Product) • Placed next to Ozarka – Domestic Spring Water • Placed next to Ozarka – Texas Spring Water
Glacia – Customer View
Wrong Association
• Wrong Product Placement • 64% believed it was from Texas
Low Awareness
• Unaided Recall – 19% • Aided Recall – 74% ( still very low)
• Canada was much less appealing to broader base of water drinker Small Target • Pricing placed the product as par with standard product Group
Glacia – Proposed Solution
Reposition Glacia as Domestic Spring water
Reposition Glacia as Domestic Spring water
Glacia – Domestic Spring Water Advantages
Bottomlime Impact Topline Impact Operational Efficiency Easy to Reposition
• Reduce Logistic Pressure
• Greater Segment of Customer • 44% customer prefer domestic spring water • Since the sourcing is located in proximity, operational efficiency can be achieved
• 64% Americans think it is a domestic brand
HEB OWN BRAND RESPONSE TO COMPETITIVE PRICING
Objective of Own Brand Product Line –
Premium Image
Improved Profitability
Sales Growth
Deeper Customer Relationship
H-E-B Own Brand Lost its premium Image
Consumer perceived Own Brand Product as generally lower quality than national brand
Consumer saw no difference between H-E-B and Hill-Country Fare Brands Product Research Revealed H-E-B did not meet national brand performance H-E-B Own Brand was always suppose to me High Margin Product but due to competitive pressure they lost this. Eg Ice-Cream and Flour
Quest to Regain Lost Ground
• Work to improve the Quality of H-E-B Own Brand Products
Quality
Abandon EDLP
• Difficult to carry Hedonic and Utilitarian Association at the same time, so abandon EDLP for H-E-B Own Brand • EDLP can continue for Hill Country Fare • Realign price to emphasize on Own –Brand Premium Image • Use Hill Country Fare to counter competitors price cut
Reposition it as Premium
?
THANK YOU
doc_723524570.pptx