An analysis of the impact of private label brands on sales: A case study of OK Zimbabwe Limited (2009 - 2012)

Abstract

The aim of this study is to explore the private label branding process and its impact on retail sales performance. Private label branding is a strategic tool adopted by retailers to increase sales and profit margins with a global average contribution to turnover of over 20 percent. The research looked into these elements of marketing mix; pricing, packaging, quality, promotion, advertising and market segmentation and their influence to performance of private label brands. In efforts to explore factors affecting private label branding in Zimbabwe, this research employs a case study approach, involving a single case organisation, OK Zimbabwe Limited. The organisation was chosen because of its dominance on the local retail industry. Data was collected through unstructured interviews with OK Zimbabwe executives and functional managers identified to be core in strategy making and implementation. The research outcomes indicate that private label brands have not made any significant impact to OK Zimbabwe sales and profit margins. The failure of these brands is due to lack of management commitment to drive the brands portfolio. The research also concludes that private label brands are affected by these factors; lack of marketing skills and expertise, negative employee attitude, poor quality of brands, price competitiveness and inadequate advertising strategies. Because of these findings, the research recommends the firm to rebrand private labels and use market segmentation to target specific customers with potential to buy its private label brands. It also recommends that the company should have private label brands produced outside the country, expand the channels of customer communication and change employee attitudes towards private label brands. The findings also discovered some gaps requiring further study. The firm must look into consumer perceptions on private label brands and evaluate the strategic fit of private label branding strategy to organisational culture.