Many companies do not have complete control over their supply chains. I’m not talking about first-level suppliers, but the entire supply chain from point of raw materials to the consumer and back. This is especially true within the retail environment. These companies purchase brands that have very little control over, if not none at all. But, many retailers have control over private labels and this is where they can create a huge impact.
Private labels, for the most part, offer companies the ability to create extremely high (some would even say obscenely high) markup ratios. What these brands usually do not offer is quality, but that is not what these companies are relying on. They want you consider the brand because of price. Why can’t the consumer have both?
Take for example brands like REI or Patagonia. They have their own brands that are made in an eco-friendly manner and have great quality. They also have a significant markup and a loyal customer following making them very profitable. Personally, I have found that people are willing to pay more to have a product that is eco-friendly. But that’s not all. Through research and development, these companies have reduced the overall costs of production and created stability as well. The entire production process is a great cost-reduction strategy.
This production process might initially have high setup costs, but done correctly will create less waste, use less inputs, have lower energy usage, and a better quality assurance. The company can also create a cradle-to-cradle process to return used/old product to recycle the materials and use during production. This not only reduces the footprint of the product, but it also engages consumers to aid in becoming socially responsible.
Create a more sustainable and eco-friendly product
Lower overall production costs
Include consumers in the process by creating a cradle-to-cradle process to recycle materials.
Engage and new consumer base that is more likely to remain loyal
Keep prices lower than competing brands
By employing these strategies corporations have the ability to increase their profitability and customer satisfaction while continuing to increase their creation and maintenance of social good.
Please let me know your opinions and suggestions by commenting.