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Advisor(s)
Abstract(s)
The importance of Private Labels for retailers in the modern grocery distribution sector
increased their responsibilities when defining price strategies. In recent years the
literature has been paying attention to the shift from an inside out to outside in
approach when defining prices. This present thesis intents to focus on pricing
strategies for Private Labels, centering in the development of a consumer oriented
price definition by looking on the optimal price gap between Private Labels and
National Brands.
Analyzing the Portuguese Market, the goal is to understand the importance of the
price comparison between private labels and national brands. The importance of price
comparison is essential to understand how the selling price gap will have an influence
on consumer’s behavior. The ultimate objective is to be able to give some insights
when defining pricing strategies and to understand how manufacturers of national
brands can react to competitive moves from retailers.
It was concluded that consumers compare more prices within the store than between
different stores, enhancing the importance of the price gap as a visible cue with an
influence on the consumer behavior. Another conclusion was that the price gap should
be tailored according to the nature of the product and the competitive category
landscape. Yet, managers should not neglect competitors’ PL prices, because in the
end price adjustments should not lead to an overall higher “basket price” compared to
competitors, which will be translated as a decrease performance in the price image of
the banner.