“Store brand” products are found across many retailers in the U.S. and offer lower-cost, yet similar-quality items compared to national brands. Because of this, often these store brands can pose a major impact to bigger brand names by taking a portion of market share. Our client, a major U.S. retail chain offering a number of store brands, wanted to identify the optimal price points for store brand products that would maximize profits without sacrificing market share of major brands.
To gain a true comparison of price points between store brand and major brand items, we needed to study the consumer demand for items within the same category. Our teams designed a discrete choice study (CBC) that allowed consumers to view a number of scenarios with store brand products at various price points compared to national brands at fixed price points. This approach would uncover the varying pricing thresholds consumers were willing to pay for one brand over the other. By comparing the data via demand curve chart for each category and brand choice, our client was able to pinpoint where brand preferences would shift based on the different price points.
From our study, we uncovered that our client should make adjustments to store brand prices to maximize profits. From the data, it was clear that to optimize price share, some categories needed to raise prices, while others required minor pricing adjustments for store brand items. In doing so, the retailer benefited from increased profits from their store brand items without sacrificing significant market share.