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    Case Studies

    Protecting Against Private Label Encroachment

    Problem: A major consumer package goods company was facing a crisis that could significantly reduce its profits. The company was getting squeezed on margin from the proliferation of private label entries in its market space. Even some of its recent product innovations were being mimicked. Efforts were urgently required to protect the company's margin and share. A number of potential strategies were considered including the introduction of one or two premium product innovations or to take some of the base products and drop the price to more effectively compete with PL.

    Solution: To determine the most effective route, MSI fielded a consumer choice study to model the effects of each product strategy that included innovation, pricing and product line-up. A simulator was developed with integrated financial data on revenue and cost of goods. The simulator allowed the company to look at both the volume and margin outcomes of each strategy.

    Results: With the research, the company was able to implement a combined innovation and pricing strategy that protected key margin products by aggressively pricing entry-level products and more effectively competing against private labels encroaching in its market space.
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