Store Brand vs. Name Brand

[SamSpade]

I've always known that sometimes - the store brand IS a name brand - just in different packaging.

What I don't understand is, why would a manufacturer EVER make a cheaper competitor to its own brand?
I get that sometimes, it's because a store - like, say, ALDI or Dollar General - might NOT carry their brand at all, so it is an easy way to sell their product.
But that's not what I typically see. Tomato paste or pasta - and it is CLEARLY the same parent company, because you can look on the side and see it.
Case in point - BURMAN'S - an ALDI brand - is parented by the same company - "Better Foods" - that makes HELLMAN'S.

I am sure someone knows the reason. Market penetration? Inferior product quality assurance?

 

[OccamsRazor]

I've always known that sometimes - the store brand IS a name brand - just in different packaging.

What I don't understand is, why would a manufacturer EVER make a cheaper competitor to its own brand?
I get that sometimes, it's because a store - like, say, ALDI or Dollar General - might NOT carry their brand at all, so it is an easy way to sell their product.
But that's not what I typically see. Tomato paste or pasta - and it is CLEARLY the same parent company, because you can look on the side and see it.
Case in point - BURMAN'S - an ALDI brand - is parented by the same company - "Better Foods" - that makes HELLMAN'S.

I am sure someone knows the reason. Market penetration? Inferior product quality assurance?

Differences in quality whether it be ingredients, components, QA. You name it. DeWalt is owned by Black and Decker. DeWalt is seen as a far superior product in many ways. Much of which is attributed to the "quality of the product."

 

[GURPS]

What I don't understand is, why would a manufacturer EVER make a cheaper competitor to its own brand?

Profits

if Green Giant can sell 10 million cans of corn with Safeway or Giant labels, then why not

at any rate, the pricing is at the retailer level .... I would hazzard a guess at the quantities Giant and Safeway purchase canned goods, the price per unit is the same - the label is irrelevant


CVS and Wal-Mart do this as well with sundries like shampoo / conditioner [ I'm sur4e 1000's of other items as well ]

 

[gary_webb]

Quality levels

Grades and Standards | Agricultural Marketing Service

www.ams.usda.gov

 

[SamSpade]

Profits

if Green Giant can sell 10 million cans of corn with Safeway or Giant labels, then why not

Because they have a Safeway can on the same shelf as the Green Giant brand - and it sells for more?
If you don't do it AT ALL, you're never undercutting your own product.

I assume it MUST have something to do with either or both of the things I mentioned - and possibly MORE - but I have never seen a work up that says "see, this is how we make money".

I DO know some small chains don't sell nuthin' but "their own brand". ALDI is a good example of having almost no name brands.
(Except their own, like "Happy Farms"). Give THEM a name brand under another label, and you make money.
The other - I have to assume - is QA. An inferior product or one that has undergone LESS quality control.
Odd, because very often I've found the store brand to be at least as good if not occasionally better.
Girl Scout cookie knock-offs, for example. They taste just as good - but they have twice as much in the package for less money.

But beyond that - I have no idea.

 

[vraiblonde]

What I don't understand is, why would a manufacturer EVER make a cheaper competitor to its own brand?

Because some people are cheap and think saving 5-cents on a can of pork and beans will make a big difference in their life. Other people want the perceived quality (and sometimes real quality) of the name-brand item. This way the manufacturer gets both of those customers.

 

[gary_webb]

Q. What don't you understand about post# 4?
A. You didn't make it.

 

[PeoplesElbow]

There is also costs of overhead and investment that selling the same product for a lower price help overcome.

Lets say Bobs DoDads can sell 100,000 units for a profit of $1 each, but in addition they can sell an additional 50,000 units for a profit of $0.25 each they will do it. The key is not to tell those who bought the first 100,000 units that the other 50,000 units sold cheaper, this is where the different branding comes in.

This is actually taught in the "Theory of Constraints" book called "The Goal"