...Hansson Private LabelHansson Private LabelHansson Private 1. How would you describe HPL and its position within the private label personal care industry? HPL is a mid-sized private label manufacturer of personal care goods. In 1992, the company acquired production assets from Simons Health and Beauty Products, and through increased efficiency had enjoyed growth within the sector. The company’s production is estimated to account for about 28% of the $4 billion sold in their product category, generating revenue of $681 million in 2007. The company was recently presented an opportunity by its largest retail customer to significantly increase its share in their private label manufacturing. The prospect of growth was risky, since it required an initial investment larger than any HPL had previously encountered. The 3-year contract offered was also relatively short. The company would be running the risk of discontinued business after expiration and subsequent heavy losses. However, the upside was obvious. If the company succeeds by locking in long-term business with a powerful retailer, it will surely pay off for many years to come. A special quality of the private label business is that manufacturers generally produce at levels demanded by the retailers they produce for. Even though private labels have been steadily gaining market penetration due to quality improvements, growth in the overall market were modest, leaving manufacturers little opportunities for big investments. Therefore...
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...Table of contents • Executive Summary……………………………………..………………………………………08 Section I • Introduction to Private Labels………………………………………………………………09 • Background: Evolution and Emergence of Private Label………..…………….11 • Review of Literature…………………………………………………………………………….13 Section II • Research Methodology………………………………………………………………………..18 i. Objectives of Research……………………………………………………………….18 ii. Research Problem……………………………………………………….…………….18 iii. Research Question……………………………………………………….……………19 iv. Research Hypothesis………………………………………………………………….19 v. Research Method………………………………………………………………………20 vi. Limitations…………………………………………………………………………………20 Section III • Data Analysis……………………………………………………………………………………….21 i. Demographics……………………………………………………………………………21 ii. Awareness………………………………………………………………………….……..23 iii. Importance of Factors influencing Purchase………………………………25 iv. Consumer Attitude……………………………………………………………….……27 • Private Label Vs National Brand: Brand Strategy………………………………….36 • Findings of Research………………………………………………………………………..….40 Section VI • Implications for Retailers……………………………………………………………………..41 • Suggestions ………………………………………………………………………………………...42 • Conclusion……………………………………………………………………………………………43 Bibliography………………………………………………………………………………………………..44 Appendix: Questionnaire……………………………………………………………………………….46 Contents of tables 1. Determinants of Success of Private Labels……………………………………………16 2. Descriptive Statistics 1…………………………………………………………………………26 3. Descriptive Statistics...
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...being private branding adopted by most of the retailer. Private brand is one of the strategies decisions for most of the retail organizations in recent years and hence many retailers’ have introduced varieties of private label in different categories like apparel, food and grocery, health care, personal care, consumer durables, lifestyle etc. Major driving force behind introducing store brand is to ensure the customer store loyalty. This can be accomplished as brand is available only in specific stores. The study aims to analyze the Consumer Perception towards Private Label Brands on Big Bazaar, Patia. This project report provides analysis and evaluation of customer perception towards store brands of Food Bazaar. The objective of the study is to understand the possibility of success when retailers introduce private brands. The research is aimed to explore if buying choices are made based on brand loyalty and to analyze whether customers actively seek for new brands or strict to the old brands. Methods of analysis include pie charts and graphs which chalk out the customer profile and how they make decisions with regards to brands. The project kicked off on the 2nd week at Big Bazaar,Patiawhen I got my topic. The 1st week went primarily studying retail store operation such as shelving, racking, selling and visual merchandising. From 2nd week onwards, I took those days when footfall is high in Big Bazaar i.e. Wednesday and weekends. I took the sales data of all private labels and the...
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...Case Study: Expansion and Risk at Hansson Private Label, Inc.: Evaluating Investment in the Goliath Facility Company Background Hansson Private Label, Inc (HPL) is a private company in the business of manufacturing personal care products for retail partners. The company started its business in 1992 via the acquisition of manufacturing assets from Simon Health and Beauty Products by US$ 42 million. The US$ 25 million equity portion in the acquisition deal was a demonstration of the level of entrepreneurism of Mr. Hansson, the business owner. According to Mr. Hansson´s evaluation, the acquisition was risky because of the concentration of his wealth in one single investment. But he also believed that the assets were purchased by less than its replacement value. During its first 15 years the Company focused on efficiency, cost control and customer relation, being able to expand its business nationwide and grow its revenues to $ 681 million in 2007 (28% market share from national consumption of $ 21.6 billion). But during the period 2004-2007 the market share by volume was stable, averaging a yearly growth rate of 1% while the market share by dollar sales averaged 1.7% yearly growth. The 0.7% gap would represent the average yearly inflation for the industry. The Company currently has four plants operating above 90% capacity. Expansion has always been approached conservatively and all new operations always commenced with a minimum 60% capacity utilization. Industry Overview ...
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...The industry within which Hansson Private Label exists is a very competitive and volatile one. It is dominated by two types of firms, namely, Branded and Private Labels. Tucker Hansson operates as a private label firm. Private Label firms are an emerging market which is competitive based on its ability to have a lower price than its rivals. This market has experienced growth primarily because of this affordability. However this growth would be regarded as organic. Based on analysis of the financials, HPL is an excellent business and shows maintainable and sustained growth. There has been growth in the areas of revenue, current assets, owner’s equity, sales and net working capital. As shown in Exhibit 4, sales across HPL retail channels increased year over year in the areas of mass merchants, grocery, club, drug, dollar stores and miscellaneous distributors. Groceries increased or remained constant during the 5-year period. Long term debt experienced a decrease each year. Exhibit 1 shows that operating revenues have increased from $503.4M in 2003 to $680.7M in 2007. During this time, gross operating profit increased by $23.4M. This illustrates that the company is not sacrificing profits for top level growth. One disadvantage is that the company is operating at 90% of capacity and addition of more accounts will necessitate investment in expansion. After reviewing the case a number of risks need to be considered. These risks would fall into two main categories, namely...
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...Hansson Private Label Directions Fin 3150 Dr. R. Abraham There is a proposal for a $ 50 million expansion for Hanson Private Label or HPL. HPL manufactured personal care products such as sop, shampoo and mouthwash The proposed expansion is HPL’s response to a retail customer’s desire to expand HPL’s share of their private label manufacturing. Consider the firm’s overall competitive strategy and proceed as follows: 1. How would you describe HPL and its position within the private label personal care industry ? HPL is a private label manufacturer of personal care goods. HPL is a private label manufacturer of personal care goods. They started in 1992 with the purchase of Simons Health and Beauty Products. In 2007, they generated $681 million in revenue. The company’s production is estimated to account for about 28% of the $4 billion sold in their product category. HPL was offered the opportunity to significantly increase its share in private label manufacturing by its largest retail customer. It involved quite a bit of risk. It was the largest investment they had seen and it called for a 3-year contract, which is considered short. Termination of business after expiration of the contract and ensuing heavy losses were some of the risk involved. If the company were to succeed, they could ensure long-term business with a powerful retailer. A special quality of the private label business is that manufacturers generally produce at levels demanded by the retailers they produce...
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...Britt Sturm Cases in Managerial Finance Dr. Morris November 9th, 2015 Hansson Private Label, Inc. (Pg. 151) 1. How would you describe HPL and its position within the private label personal care industry? Hansson Private Label, Inc., (HPL) founded by Tucker Hansson in 1992 when he decided to purchase the manufacturing assets of Simon Health and Beauty Products. Hansson had background in branded personal care products and wanted to change his position in the market place. The personal care industry includes products such as, hand and body care, personal hygiene, oral hygiene, and skin care. U.S sales of this industry totaled $21.6 billion in 2007. The private label personal care industry is driven by five primary categories: mass merchants such as Walmart, club stores such as Sams Club and Costco, supermarkets such as Kroger, drug stores such as, Walmart and CVS, and lastly, dollar stores. Manufactures had to persuade large chains to carry their product in such a highly competitive market. In order to better serve this highly competitive market, Hanson bought HPL for $42 million with, $25 million of his own money, and $17 million of money that he borrowed. Overtime, HPL grew at a conservative rate but had become a leader in the private label industry with four plants, which were all operating at 90% of capacity. HPL serves most of the major national and regional retailers as customers and has a dominant presence in the marketplace. 2. Using Exhibit 5 assumptions...
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...Hansson Private Label | ACF - I | 1. How would you describe HPL and its position within the private label personal care industry? HPL manufactures personal care products that are sold under the band label by other companies. The company has stable whole sales growth rate and has become successful by efficient manufacturing, good expense management and appropriate customer service. In the recent years, the company has been facing a great amount of competition in the private label industry. In conjunction with competition, the industry has been experiencing slow growth, with unit volume sales increasing less that 1% over the past four years. Even with those factors, the company has a solid foothold in the market; according to its financial statements, HPL is estimated to have a 28% share out of its industry with revenues in 2007 reaching $681 million. The competition in the private label manufacturers is from brand name manufacturers, but the private label industry is offering better prices and quality, which is more appealing to consumers. Expansion would be beneficial for HPL; the company’s current four plants are at 90% capacity so expanding will be required in the future regardless. Even though HPL has a share of 28% in the industry, it is not the leader but establishing a contract with a strong retailer could help bolster the company’s position. But a contract of this magnitude would expose HPL to any financial stress the contractor could potentially face. If for...
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...Case – Hansson Private Label, Inc. Question 1: How would you describe HPL and its position within the private label personal care industry? HPL started in 1992, manufacturing personal care products – soap, shampoo, mouthwash, shaving, cream, sunscreen and etc., and selling them under the brand label of HPL’s retail partners, which includes supermarkets, drag stores, and mass merchants. It is a conservative company similar to other private label manufacturers since the have never had major expansion plan in the past and the only investment opportunities they had evaluated are incremental new product types. They also tend keep the debt at the modest level with facility over 60% of capacity utilization. HPL is a major supplier for retailers’ private label of personal care products for the company’s $680.7K sales accounts for 28% of $2.4 billion whole sales from retailer’s personal care market. However, if compare to the whole $21.6 billion personal care market, HPL’s share within the retailer’s total $4 billion sales market size accounts for 3% of the industry. Question 2: Using assumptions made by Executive VP of Manufacturing, Robert Gates, estimate the project’s FCFs. Are Gates’ projections realistic? If not what changes might you incorporate? Please see Table 1 for the calculation based on Gate’s estimation. FCF = Free Cash Flow = Operation CF - Capital expenditure = EBIT (1-Tax Rate) + Depreciation & Amortization - Change in Net Working Capital – Capital...
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...Case Study: Expansion and Risk at Hansson Private Label, Inc.: Evaluating Investment in the Goliath Facility Final Project by Rodrigo Montechiari Company´s Business Operations, Strategy and Past Performance HPL is a manufacturer of personal care products for retail partners. Its strategy has always been to focus on efficiency, cost control and customer relation to guarantee solid revenue grows until 2007. Expansions have always been carefully analyzed and the Company never worked below 60% capacity utilization. HPL has been able to grow its revenues to $ 681 million in 2007 accounting for 28% of national consumption but the Company is working close to maximum capacity. On the other way, its performance on units sold is growing only at 1% per year and, since capacity utilization averages 90%, there is no room for further increase in revenues if not through expansion to a new facility. The Business Opportunity Facing four years of low growth rates and fierce competition, HPL has the opportunity to expand its production and increase its margins by signing a 3 years term contract with its biggest Client on the personal care products line. The opportunity has its risks. An initial investment of USD 45 million will be necessary and the Client, who is already HPL biggest one, only commits to a 3 year term contract. In addition, the necessary investment would double HPL debit and significantly increase its financial leverage. Consequently, any financial distress form the client would...
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...Professor: Brent Barr Student: Jaspreet Banwait Student Number: 500351380 Due Date: April,3,2012 Course: RMG 200 Table of Contents Title Page……………………………………………………………………………….….1 Table of Contents………………………………………………………….…………..2 History of Harry Rosen and Objective………………………….…………….3 Theory 1……………………………………………………………………….…….……..3 Potential Gap at Harry Rosen……………………………………….…………….4 How To Address The Gap and Expected Outcome………………….....6 Theory 2…………………………………………………………………………………….6 Potential Gap at Harry Rosen (2)………………………………………………..7 How To Address The Gap and Expected Outcome……………………..7 Exhibits………………………………………………………………………………………9 Bibliography………………………………………………………………………………11 History of Harry Rosen and It’s Objective Harry Rosen has been recognized as one of Canada's most creative and innovative retailers. Harry Rosen is in the business of assisting men develop a confident, personal image, in all aspects of their life – any day, anytime and any occasion. That’s achieved by offering the ultimate in high quality apparel, expertise, selection and unparalleled service. The objective of the company and their mission is “To Exceed Each Customer’s Expectations” and “to thrive and grow by inspiring a sense of personal style among men of distinction”. The company first started in 1954 where a small shop was opened on Parliament Street in Toronto’s Cabbagetown, with only a down payment of $500. The store was operated by Harry Rosen himself and his brother Lou. The reason they...
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...National Branding vs. Private Label Branding | National brands typically have a better value for the consumers compared to a private label brand, because national brands generally sell far more than private label brands. In all probabilities, consumers believe that the national brands are typically of higher quality. Whether this belief is factual or not is irrelevant to the outcome in the market, as long as consumers believe it. There is very small difference in quality between some national brands and private brands, yet consumers pay more for the national brands. Usually, it is hard to know, without the aid of chemical analysis or other forms of tests, whether private brands match national brands. Uncertainty may occur due to many reasons. For example, a bread company produces many private-label breads. This however does not mean that private brands are of the same quality as the name (national) brand. The bread company may differ in its formula when producing private brands, and we should also consider that the private brands may not be as fresh as the national brands (Kis 10). Similarly, we can also look at the case of say the largest brewer of beer in your region under its own national label; can also be among the biggest supplier of private-label brand of beer. Many private-label brands of wines and spirits as you have witnessed are produced by well-known national-brand companies. Consumers are usually willing to pay more for national brands, because they are...
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...Private Labels Private label brands were traditionally defined as generic product offerings that competed with their national brand counterparts by means of a price-value proposition- first developed by Sainsbury in the U.K. in 1869 (Collins & Bone, 2008), these products often sacrificed quality to reduce costs and appealed primarily to lower-income consumers.. Often the lower priced alternative to the “real” thing, private label or store brands carried the stigma of inferior quality and therefore inspired less trust and confidence. There was no attempt to make them anything more than just a ‘value pay’ and retailers evolved these products often referred to as private label. These are terms consumer use interchangeably, but the market has actually changed quite considerably. Retailers continued to push more and more private label products into different categories of the marketplace because they represented high margins and the promise of profitability with little to no marketing effort . The first value brand was Tescos Value range, launched in 1995; today, it includes over 2,000 products in food and non-food categories (Collins & Bone, 2008). Other retailers quickly followed suit creating their own value lines. In India private label penetration began in the mid-2000s when retailers established organized retail format stores across the country. - Organized retail occupies a small percentage of the overall retail market in India. Traditional forms of retail, such...
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...effective unwritten agreements to limit in-pack premiums to one brand at a time for each company, to refrain from trade dealing (offering discounts to retailers for special treatment or special promotions), and withhold from widespread vitamin fortification. These tools, if employed, would temporarily increase a firm’s market share at the expense of its competitors. Because the Big Three avoided these practices for many years, they prevented a cycle of escalating costs that would ruin the RTE industry profitability. However, technology advancement, increase in price by big brand, emergence of new channels and coupon complexity of big brands allowed private label to gain share from 1990 to 1994. Private labels avoided using high cost ingredients but focused on producing quality level near to that of branded products. These private labels used clear plastic bags for...
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...5. How firms extend quality image with variety of private-label products 1. Good firm reputation; According to the case, Pick’n Pay is the biggest retail corporation in South Africa. Its mission is trying their best to serve the consumers. Its mission statements, such as, WE SERVE, We CARE for, and RESPECT each other, and We are all ACCOUNTABLE, give their customers a clear image of a firm stick to consumerism. Pick’n Pay has high social responsibility. Through different projects, education programs and fund-rising events, the firm impressed the South Africans in various ways. Due to Pick’n Pay’ s good firm reputation customers will trust this brand more and consider its private label as high quality product. 2．Various market segments; There are several different retail concepts under Pick’n Pay, such as, small discount-price stores, neighborhood supermarket, and family hypermarket, and up-market stores. Due to this strategy Pick’n Pay can design different private label products accordingly and launch them into different markets. Pick’n Pay has a wide range of product categories. So customers will reach the private label products, which are fully considered by Pick’n Pay. 3. Suppliers In order to provide high quality private label products, strength of the private label strategy lies in a close relationship with suppliers. "Our top 20 suppliers are responsible for 60%-70% of our sales," according to Woolworths CEO Ian Moir. Only the trustable suppliers can provide...
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