Hansson Private Label

During the second half of our trading period we focussed massively on the private label market and found our niche there. We had realized that the minimum cost of the product wins the market share so we started experimenting with S/Q Ratings and percentage of superior materials to come up with the best product with the least cost price. Adding minimum profit margin to the cost price we were able to seize a massive chunk of the private label market. Attached are a few snapshot highlighting our success in that market.

3. Estimate the project’s NPV. Would you recommend that Tucker Hansson proceed with the investment?

Thus, by year three the company will be making a profit off the investment as year three is 86.73 million profit by 55.35 cost giving the company a 31.38 million dollar surplus. Generally, a period of payback of three year or less is acceptable (Reference Entry) causing this project to be viable based off the payback analysis. Although, these calculations are flawed. The reason for this is because the time value of money is not taken into effect when calculating payback periods which is where IRR can further assist in a more realistic financial picture (Reference Entry).

Assume the company has a P/B (payback) policy of not accepting projects with life of over 3 years.

The coupon promotions diminished brand loyalty to the Big Three by encouraging price-sensitive brand-switching. Private labels emerged as an alternative when there were no coupons or promotions. In the early 1990s, some Private labels caught up to the Big Three in terms of technology gaps AND IMPROVED UPON THE QUALITY. Finally, new entrants were successful in leveraging the drawbacks of higher price due to increased cost of manufacturing, promotions, couponing and advertisements, a trait linked with branded companies. IN THE LIGHT OF NEW FINANCIAL RESULTS, EVEN THE RESTRAINT ON INTERNAL PRICE COMPETITION SEEMED TO BE TAKING A BACK SEAT

In the case of Worldwide Paper Company we performed calculations to decide whether they should accept a new project or not. We calculated their net income and their cash flows for this project (See Table 1.6 and 1.5). We computed WPC’s weighted average cost of capital as 9.87%. We then used the cash flows to calculate the company’s NPV. We first calculated the NPV by using the 15% discount rate; by using that number we calculated a negative NPV of $2,162,760. We determined that the discount rate of 15% was out dated and insufficient. To calculate a more accurate NPV for the project, we decided to use the rate of 9.87% that we computed. Using this number we got the NPV of $577,069. With the NPV of $577,069 our conclusion is to accept this

As a manufacture of private label personal care products, Hansson Private Label, Inc. has a considerable amount (28%) of market share in its specific industry. However, private labels as a whole constitute less than 19% in the entire personal care industry. Therefore, growth of HPL depends on the growth of the industry and more importantly the growth of private label component within the industry. In terms of the personal care industry, market growth will not improve significantly in the future. As proven in the past four years, unit volumes in the industry increases less than 1% in each year and the dollar sales growth was only driven by modest price increases. Therefore, the opportunity for private labels

Private label brands are a growing product offering worldwide. The researchers attempt to understand the factors that have influence the growth and expansion of private label brands. Private label brands are compared to national brands and the influence the private label brands have on consumers’ purchase intentions. Consumers’ intentions to purchase private label brands are influenced by more than just prices. The researchers found that private

The reason for retailers to launch their private labels is obvious isn’t it? They can set their own prices, while having a control over the entire process from the manufacturing to distribution. Their margins on these private labels are therefore significantly higher. Future Group’s Food Bazaar would hence boost its private label, ‘Tasty Treat’ over its competing brands. But is there more to

(2010), private label brands have established their market in the United Stated and Europe in the past few decades. The consumers tend to perceive private label brands as a substitute or choices to the national brands [Lupton 2010].

Customer demand, no competition, large margins. Every seller strives for those things, but with the positive comes the work, and the work includes getting to know what you should do and most importantly, what you should not do. While building your own private label brand has appeal for lots of reasons, DIY product label-building may not be the best course of action; the private label product business can be steeped with risk. An effective system to use while building a private label product business should include: product evaluation, proper legal vetting, identification to the right manufacturer partners overseas, small minimum order quantities (MOQ) on a wide range of products and all the hard work necessary to get your products launched on Amazon.

INVESTMENT DECISION AND CASH FLOWS A positive net present value (NPV) is a direct estimate of value creation for shareholders and is an operational way of carrying through on the strategy of trying to maximize shareholder wealth. To calculate NPV, however we need to estimate the cash costs and benefits of any decision at hand. In this note we discuss the evaluation of investment proposals.

In this case, this decision is mainly focusing to add more value to the company. When a company enters into a new venture, there are probabilities for both success and failure (Rothman, 2009, p. 58). A detailed market research and an in depth analysis is required before making any investment decision as this will affect the entire organization. In this

In addition to reducing expenditure on promotions, EDLP can create a more steady sales process, rather than the peaks and valleys of high/low. As Ron Johnson, the CEO who transitioned J.C. Penney to EDLP noted "Wal-Mart taught us all in the '80s when you get a steady sales process, what happens? You can manage the business better" (Associated Press, 2012). EDLP has cemented Walmart’s reputation as a low-price leader, and serves as an excellent example for the ways EDLP can help a business streamline their supply chain, as an EDLP strategy has a more predictable demand curve. EDLP is also very simple for the consumer to understand, and can become a part of branding strategy for the company as well.

* The price of the private labels was 20 -25 % lower compared to that of the branded ones.