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I need help in understanding the dec 2007 question Perfect shopper.
The suggestions listed above assume that Perfect Shopper continues to only supply branded goods. Moving further upstream
in the supply chain potentially moves the company into the manufacture and supply of goods. This will raise a number of
significant issues about the franchise itself.
At present Perfect Shopper has, by necessity, concentrated on branded goods. It has not really had to understand how these
goods sell in specific locations because it has not been able to offer alternatives. The content of the standing order reflects
how the neighbourhood shop wishes to compete in its locality. However, if Perfect Shopper decides to commission its own
brand then the breadth of products is increased. Neighbourhood shops would be able to offer ‘own brand’ products to compete
with supermarkets who also focus on own brand products. It would also increase the visibility of the brand. However, Perfect
Shopper must be sure that this approach is appropriate as a whole. It could easily produce an own brand that reduces the
overall image of the company and hence devalues the franchise. Much more research is needed to assess the viability of
producing ‘own brand’ goods.This is how both BPP and ACCA answered to the question in upstream supply chain. And i am not understanding what it is suggesting : Whether to manufacture it itself or whether it wants the supplier to produce Perfect shopper brand. If this is the case can that happen? The question is how could a well branded supplier produce for another one with the Perfect shopper requirements package quality brand name and etc? Practically doesnt this mean that suppliers brand will deteriorate and so will its sales? who would do such a thing when knows that its goods will not be preferable (as of course perfect shopper will try to sell and market its own branded goods rather than suppliers) at the same time with this change suppliers and Perfect shopper will be competitors? Does perfect shopper has the guarantee that its branded goods will be produced to the right quality? (imagine Unilever or other major brands producing for its competitors, this just doesnt make sense to me)
And if perfect shopper, manufactures them itself this will require major capital exp, machines building. Lets assume he has the capabilities and carried out a market research and the product will be preferred, Isnt this in conflict with what it is stated earlier in the answer that it would re position itself as a primary sales and marketing operator?
Please help me understand thisOwn-brand goods such as those sold by supermarkets are hardly ever produced by the supermarkets themselves. Supermarkets are good at selling and as you suggest to start manufacturing goods would require huge capital investment as well as additional knowhow and skills.
To give you an example from the UK, a very well-known and fairly up market food producer is called Baxters. It makes soups, casseroles, jams etc under its own name and they sell at premium prices. However, supermarkets in the UK such as Sainsbury’s all sell their own-branded soups, jams etc and many of these are made by Baxters. All own-brand goods sell at lower prices than Baxters branded equivalent products and sometime there might be products made uniquely for the supermarket.
So you can have two differently-branded almost identical products made by the same manufacturer and priced differently next to each other on the supermarket shelf. They appeal to different market sectors: Baxters to the up-market more affluent sector and own-brand to the value-seeking sector. It’s better for Baxter’s to sell cheaper produces under the anonymity of the supermarket brand than confusing the public with its own cheap brand.
There’s no problem guaranteeing quality: this is a matter of contract agreement and testing the products made.
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