Corporate brand products play a central role in Kroger's merchandising strategy and provide a key competitive advantage to Kroger. Kroger uses its corporate brands to build and solidify customer loyalty. Kroger supermarkets, on average, stock approximately 11,000 private label items. Kroger brand products are produced and sold in three quality tiers. This strategy fills the needs of all customers in the various markets in which Kroger operates. All tiers are value priced to offer shoppers big savings over other premium, national and economy brand items.
Private Selection is Kroger's premium quality brand is designed to meet or beat "gourmet" or "upscale" national or regional brands.
Banner brands (such as Kroger, Ralphs, King Soopers), which represent the majority of the 11,000 items stocked in stores, are designed to be equal to or better than the national brand. These brands are backed by a "Try It, Like It, or Get the National Brand Free" guarantee.
Value brand is designed to deliver good quality at a very affordable price.
Kroger’s three-tier corporate brands strategy generates enhanced profit margins and its “good, better, best” approach enables Kroger to serve a very broad and diverse customer base. Approximately 39% of the corporate brand units sold are produced in Kroger's 40 manufacturing plants; the remaining corporate brand items are produced to Kroger's strict specifications by outside manufacturers.
http://www.thekrogerco.com/operations/operations_manufacturing.htm
How does Kroger expect to sell its private selection at any price above their banner brands? The value behind a lot of the products on the stores shelves is their brand name. Walking around with a can of Kroger doesn't have the appeal of Coca Cola even at 20% off.
ReplyDeleteKroger sees this as an opportunity to build customer loyalty because the private selection can only be purchased in Kroger stores. The program was launched in 2000 and every product can be exchanged for the national brand or the shopper can get a refund if they do not like the product. I agree that a Big K is not the same as a Coke or Pepsi, but Kroger is counting on the private selection items to be as good as or better than nationally branded premium items.
ReplyDeleteI think it's great they give consumers the option. Some of us prefer brands in some things and are willing to 'try' Kroger brands for other things. In combination with 'the Kroger card' savings can add up.
ReplyDeleteThere a lot of people out there who would rather save $2-$3 buying a 12 pack of Kroger sodas, especially outside of cola. I bet they sell a lot of citrus drop, root beer, lemon lime, and Dr. K. It would seem the easy place in the market to pull th volume away Coca Cola and Pepsi other lines.
ReplyDeleteI would think where their "private selection" would win out over the "banner" would be products that are part of preparing a meal because then people don't realize they aren't consuming the brand name brand. Example: you probably couldn't tell if I used a private selection spaghetti sauce rather than Ragu. Almost anyone can tell the difference between a Dr.K & a Dr.Pepper, though.
ReplyDeleteI agree Jennifer. Even if there is not a taste difference (which I actually think there is with the drinks) I believe that just some people will not even try the banner brands such as Dr. K due to the perception that they are drinking a "generic" soft drink.
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