Why do retailers carry private-label brands?
A)To eliminate the need for competitive advantage
B)To support trade promotions
C)To prevent sales cannibalisation
D)To earn more profit
E)To encourage more transaction marketing

Question

Quizplus · Accepted Answer

Retailers carry private-label brands to earn more profit. Private-label brands allow retailers to sell products at a higher profit margin because they do not have to pay for the marketing and advertising costs associated with national brands. Additionally, retailers can control the pricing and distribution of private-label brands, which further increases their profitability.

Answer: C
 Retailers may carry private-label brands to prevent sales cannibalisation. Sales cannibalisation occurs when a retailer's own private-label brand takes sales away from a national brand they carry. By offering a private-label option, retailers can retain customers who may otherwise switch to a competitor's product.

Both options D and C can be correct depending on the retailer's strategy and goals.

Why Do Retailers Carry Private-Label Brands