Retail Management Assignment

H-E-B Own Brands

Submitted by: Samriddhi Saxena (160201100)
Submitted to: Dr. Sita Mishra

Case Facts

Recently, Rob Price was appointed as a new Vice President of H-E-B private label- Own Brands
Charles Butt (Chairman) wanted to increase the sales of the Own Brand.
Currently Own Brand accounted for 19% of the sales whereas national brands represented rest
of the sales
Charles wanted the sales of the private label (Own Brand) to increase by 11% in the next five
years (expected ratio, private: national brands- 30: 70)
The increase was targeted for all the product lines under Own Brand but Robs major focus was
on Own Brands bottled water under name Glacia
The USP of Glacia- imported spring water from Canada was not promoted enough, which if
done Rob believed will increase its market share significantly. Competitor of Glacia was Evian-
water imported from French. According to a research done by Rob, customers will be more
inclined to purchase Glacia if they come to know it is Canadian spring water
In the competitive grocery market, Wal- Mart was providing tough competition in terms of
pricing. It could provide very low prices because of its national as well as international supply
chain relationships. Wal-Mart had its own private label in Great Value products but its quality
was low as compared to Own Brands products. Great value compared to H-E-Bs Hill Country
Fare tier- 3 generic

Dilemma

Rob must decide if he should position Glacia to compete with Evian as both are imported spring
water or should continue positioning it against Ozarka, and add the Canadian feature to boost the
sales.

A third possibility is that Glacia can be repositioned (re labelled and re launched) as a domestic
spring water which is what Ozarka is.

Decisions need to be taken in terms of pricing, positioning, promotions and corporate strategy.

Analysis and Solution

Currently Evian had far out priced itself as compared to its competitors. Glacia as a product was
equally competitive as concluded by a double blinded test. Glacia pricing can be significantly
increased to relate to the prices of Evian. Also, this will give an opportunity to Own Brands to create
a Hill Country Fare product that can compete against Ozarka. However, Evian was a premium
national brand that bought in procurement revenue. If Glacia starts beating Evian in sales, Evian will
eventually withdraw its product from H-E-B and as a result the money for procurement revenue
derived from national brand will be lost.
National brands attract customers and many of the customers who come to purchase national
brands end up purchasing Own Brand. This was the motive behind keeping 30:70 ratio. Glacia can be
improved (Canadian feature) to effectively compete against Ozarka. This will significantly increase
the sales of the private label and they need not compete with national brands. Also, this will help
avoid the efforts of re- configuring pricing and moving Glacia closer to Evian.

There is no point of wasting money on re labelling, promoting and re launching Glacia as a domestic
spring water as it is already a direct competitor of Ozarka. The only point of difference for Glacia was
its source- Canadian spring water which it should leverage.

Solution: Glacia should be re launched as a generic competitor of Evian. The product need not be
changed, only the labelling. Evian needs competition and Glacia can increase price and profit
significantly. Also, a Hill Country Fare product- purified water should be created and placed just
below Ozarka.

There is a probability that this would lead to cannibalization of Evian as Evian customers have shown
preference for Canadian water. This might result in loss of procurement revenue. But the profits
from this strategy would overcompensate the loss as implied by the exhibits.