Private label outsourcing at MegaTex – necessity, accessory or a parasite?

Abstract

Subject area The subject area is marketing strategy. Study level/applicability The case is well suited for MBA and executive MBA class on retailing management, strategic management, marketing strategy and brand management. Case overview Retailers see private label as a strategic weapon against brand manufacturer to increase store profitability, but looking at the private label from brand manufacturer’s perspective, determinants and strategic choices are even more complex than that of a retailer. The case is about MegaTex Ltd.’s strategic call for private label production opportunity by Maximus Fashion and Retail Limited. The case discusses the dilemma of MegaTex for manufacturing private label in spite of having their own brand in competition. The case compels to drive strategic questions such as in what circumstances brand manufacturers should concentrate on manufacturing their own brand or should they concentrate on both private label and their brand? Or, as an alternative, should they purely dedicate themselves in manufacturing private label and stop manufacturing their own brand? Expected learning outcomes Participants will be able to understand the concept and economics of private label. Participants will be able to understand the determinants and strategic choices for private label from retailer’s and manufacturer’s perspective. Participants will be able to understand the rationale for which brand manufacturer opts for manufacturing private label in spite of having its own brand in competition. Participants will be able to identify the situations under which a brand manufacturer should concentrate on manufacturing his/her own brand or both private label and his/her brand. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or e-mail support@emeraldinsight.com to request teaching notes. Subject code CSS 11: Strategy.