Brands vs Private labels
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Transcript of Brands vs Private labels
Private-label products are typically those manufactured by one company for offer under another company's brand
They are often called as retail store brands
India represents the least-developed retail market in Southeast AsiaModern trade penetration is 5%, compared to more than 50% for most Southeast Asian markets
But
India is one of the most successful private-label markets in the region
Private label grew 27% between 2012 and 2014
What’s driving this growth?
New generation of shoppers is less brand-loyal and more open to trying new products.
Private label caters to a segment that wants to participate in the modern trade experience but is not as brand savvy
Shoppers are looking to trim their shopping bills and find greater value for money,
This is a key reason why private label can be successful in India.
And while private label has gained traction and will continue to grow, what should brand managers do??
7 golden tips for national brand managers
Invest in brand equities
But the brand’s core promise that it will get clothes cleaner than any other product has never been compromised.
P&G has made 70 improvements to Tide since its launch
Innovate .
wisely
Many line extensions confuse consumers, the trade, and the sales force, and reduce the manufacturer’s credibility with the trade as an expert on the category
This opens the door for a private-label program that focuses just on a brand’s best-sellers
Oreo came up with a line extension of orange
Oreo marketed it through constant advertising
Brand positioning
It is very difficult to change the image of a brand as human mind is not ready to accept the change in the views they have already formed about particular thing and then form a new image so quickly, but this is where the role of the successful and intellectual marketers comes
Vodafone changed the positioning that Hutch had developed in the minds of Indian consumers by replacing hutch dog ad with Vodafone Zoo Zoo’s ad
Even most trusted brand of India TATA’s had to undergo a makeover to appeal to the younger and more knowledgeable generation
Use fighting brands sparingly
Fighting brands must be price positioned between private labels and the national brands they aim to defend
Build trade relationships
Manufacturers must leverage their knowledge to create a win-win proposition for their trade accounts
Loan retailers an accountant to educate them about private-label profitability
Explain that the shopper who buys a national brand rather than the private label in the same category spends more per supermarket visit
National-brand manufacturers can suggest and pay for tests that compare the sales and profitability of a store’s current shelf-space allocation plan
Manage the price spread
National-brands must monitor the price gap to the distributor and to the end consumer between each national brand and the other brands, including private labels
Exploit sales-promotion tactics.
Compare and save
How to avoid this????
Brands must reward retailers for increasing sales volume
Distribute coupons to households in areas where retailers are aggressively providing private-label products
Coca cola India conducts in store campaigns to promote sales
.
Manage each category
Low private-label penetration categories such as candy and baby food
Managers must understand and sustain the barriers to entry—such as frequent technological improvements within a category, intense competition among national brands
Emerging private-label penetration catogery
Consider value-added packaging changes and line extensions—that make the product stand out on the shelf, keep consumers’ attention focused on the national brands
Well-established private-label penetration
. The emphasis must be on lowering the costs in the supply chain—through minimum orders, direct shipment discounts and more efficient trade deals ; save money for reinvestment in the brand
Take private labels seriously
Every national-brand marketing plan should include a section on how to limit the encroachment of private labels.
National-brands should bring legal actions against copycat private labelers who use the same packaging shapes and colors as the national brands
India is the world's biggest market for biscuits with a market share of 22 per cent in volumes
But the competition is very high from national brands and private labels
Competitors
Britannia
Parle
Private labels
The way to target Indian consumer's stomach is through competitive pricing, high volumes and strong distribution, especially in rural areas.
The focus was to target the top 10 million households which account for 70 per cent of cream biscuit consumption
The Made in India tag meant using locally-sourced ingredients, modification of the recipe to suit Indian tastes and possibly cheaper ingredients, a smaller size and competitive prices.
Made in India tag is used
Kraft foods launched its Oreo cookie at Rs 5 for a pack of three to drive impulse purchases and trials, Rs 10 for a pack of seven and Rs 20 for a pack of 14 for heavy usage
Oreo has very careful marketed its line extensions by constant advertising
The company focused on using the togetherness concept to sell Oreos in India, with television forming the main medium of communication although other media are also being tapped
Oreo is driving point-of purchase sales with store displays and in-store promotions in a bid to overtake market leader Britannia Good Day's distribution
Now Oreo India is growing into an Rs 500 crore brand with a market share of 35 percent.
Pitfalls to be avoided by national brand managers
Jumping in without a strategy
Always have a strategy on how to tackle private label products
DO not have an aggressive strategy against private label products
Do not expect immediate results for any strategy
Concentrate on quantity and not quality
If a brand doesn’t have its own private label , don’t start it now
Having a private label may lead to excessive quantity demand which in turn reduces the quality
Make sure that line extensions doesn’t lack originality
This mistakes by national brand managers can show a way for private label managers to find the success
Success story of a private label
It is a shirt brand which has grown from private label to private brand
It is targeted at premium segment customers
Its price ranges from 300 to 600
But john miller’s low price ,high quality and constant innovation gives it a good market share in India
Competition from Peter England and john players is very high
"These slides were created by by Sai Kiran Nagabhyru as part of an internship done under the guidance of Prof. Sameer Mathur (www.IIMInternship.com)"
-Sai Kiran Nagabhyru