Some retailers view private label brands as a blindfold to competitive intelligence, specifically pricing. When it comes to private label pricing, it can be hard finding a good benchmark. This is because the product name, UPC, and more can differ greatly between private label and national brands. So what’s the point of carrying a private label product if it lacks a lot of the benefits that come with national brands?
Private label brands lack MAP policies. This gives you full pricing power on your private label brands, which also comes with great responsibility. You want to take your overall costs for that product into consideration, and you’d also want to get a general idea of how that product category is priced.
Classification algorithms are useful when the details of a product are a little fuzzy around the edges. Yes, they are useful to just find MPNs and UPCs, but they can be much more powerful to replicate human logic. They can differentiate between something as broad as the product’s category or type, or as narrow as size or color to find the most accurate match possible for your product.
The cool thing about these algorithms is that they can scan the web and collect results faster than a human ever could. Burning through thousands of product pages in a matter of hours, classification algorithms automate what would be an especially tedious manual process that would be drawn out over a much longer time.
In general, private label products are priced lower than national labels. This is because private label products lack the brand value carried by national brands. These brands have earned a reputation and consumers will pay top dollar for that brand value. Private label products have long carried a reputation of being a “cheap” alternative and therefore have weaker brand value. Despite luxury private label brands from retailers like Target, consumers usually purchase private label brands because they are a less expensive alternative, which is reflected in the fact that their sales increase during a recession.
And with a lack of MAP policies, you can cut your prices and become more competitive with these products. It’s often a good idea to price just below the national brand to keep your prices competitive and more appealing to the price-conscious consumer.
By using private label products as less expensive alternatives, you can equip your store to compete against categories you were previously uncompetitive in. That way you can appeal to your loyal customers who shop for your national brands and attract more price-conscious consumers looking for a better deal.
Pricing with private label products does not have to be complex. By using them as competitive alternatives to national brands, you can stay ahead of the competition. The first part is gathering the necessary data. By combining the powers of our Wiser solutions, you can optimize your private label pricing strategies.