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Private Label Outsourcing at

Submitted by:
-Sakshi gopal
-Tanisha Agarwal
-Shalini shivankar
-Amogh
MegaTex
Incorporated in 1956
Based in Mumbai
60000sft operations compound
Extremely competent infrastructure and skilled manpower
Competitive advantage of Distinctive sourcing and lean
Manufacturing
Caters to baby boomers, gen x,y,z
Continuous innovation Denims with Biodegradable yarn,
jeans for Hikers, Cyclists
Product Portfolio
M.O jeans(men and
women)
MegaTex
Molly Joe(dresses women)

Sanskriti(ethinic)

No.62(leather)
Market Segmentation

Above
Super premium

3500
1500-
Premium
3500
1500-

Medium
800
800-

Mass
500
250

unorganized
Market Information
57% unorganized, Non-branded denims
Indian Denim market to grow at 15%
85% mens segment
9% women
6% children
Major production in western and northern parts of India
Low level of Entry barrier
Low level of differentiation
High level of imitation
Non- automation
Ever Changing trend
Maximus
Maximus retail limited est. in 1997
Has approximately 250 brands comprise of private labels and
licensed brands
Retail space one of the highest in india
Accounts for 28% sales revenue of MO jeans
What are Private Label brands?

Phantom Brands
Products (or services) which are generally manufactured or provided
by one company under another company's brand are known as
private label
Commonly referred to as OEM products (Other Equipment
Manufacturer)
Cost associated with Private Label Manufacturing?

Private labels reduce COGS and thus effect the bottom line directly
private-label products are easy to produce in volume and
inexpensive to manufacture
operating costs are low, You can make and ship all your products to
one customer.
organizations try to manage their private-label business in separate
divisions to compete better with the lean cost structures of private-
label-only manufacturers. In such private-label manufacturing
cannot be contained, and inevitably the private-label goods
cannibalize national-brand sales.
What are the factors that favour private-label penetration?

Increased Margins.
Reduced Competition
Brand Builder
Compensation Booster
Retail sales volume
Price differentials between national and store brand
Strategic choices for Private Label from Maximuss perspective

Lower price alternative with equivalent quality


Maximus wanted thus highly innovative, flexible and understanding
manufacturer
Thus Maximus intended to collaborate with Big manufacturer
Strategic choices for Private Label from brand MegaTexsperspective

Adopting a dual strategy model was in best interest of Megatex


Manufacturing private labels for retailers can increase power over
price gap between own brand and private labels
Control on Production, Marketing, Distribution
What are the possible solutions for MegaTex Limited?

Do private label audit


Calculate Private label profitability on marginal and full cost basis
Understand the Market share of Private Label and National Brand
Use profits of Private label to leverage National Brand
Channelize its product through maximus for sales volume
Why Megatexshould go for manufacturing private label in spite of
having his own brand in competition?

India is highly unbranded jeans market with the growth of 27% in


Private labels
Private labels utilize the availability of spare capacity due to
fluctuation between Demand and Supply in seasons
Improve relation with suppliers due to purchase of more raw
materials and thus better discounts from Suppliers
In house research of consumer behavior
Under what circumstances a MegaTexshould concentrate on manufacturing
his own brand or both private label and his brand?

When the concern is profit


When price war is not a concern
Occupy the shelf space
Utilization of production capacity( as MegaTex has good infrastructure
And skilled manpower, it can afford it)
To overcome Price gap (1599-2999- national, Private- 499-1499)
People are inclined towards Non-branded
Maximus has a large reach
Retailer has more power than manufacturer for the end consumer

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