Prakhar Singh

A brand placed on products that a large manufacturer has created for a smaller retailer.

example: DJ&C by Big Bazaar

Private label strength goes up during economic downturn and down in strong economy

Offer low cost alternatives to branded products Faster production Almost negligible R&D cost Line filling helps in more shelf space for in-store

brands

Competitive reasons, if we don’t somebody else will Profits from private label to be used in advertising of

parent brand Diversification More shelf space More knowledge about the consumer

Private label brands are developing quality products Development of premium private labels Mass merchandise retailers have more incentive to

develop in-store brands Product category extension, i.e. from traditional

food and grocery to apparels and electronics

Conduct a private label audit to inform the top management

Calculate private label profitability Examine the impact of private label brand in the market Close excess-capacity instead of manufacturing for a

private label

National brand manufacturers who produce private label brands should think hard about their decision because this production deviates the management’s focus from their own brand.

It’s difficult for an organisation to manage both these activities well.

Brand names affect purchase decisions Brands have solid foundation in customers mind Significant high brand-equity than private labels Brands drive retail store visits Excessive emphasis on private labels dilutes strength

of private labels

1. Invest in brand equityThe capitalized value of the trust between a company and its customer. James burke

2. Innovate wiselyDon’t just go on including line extensions

3. Use flank marketing sparinglyFighting or flank brands should not cannibalize the core product

4. Build Trade relationshipsInform retailer about the advantages of supporting national brand

5. Educate them about private label profitabilityTell them that national brands bring in more spending from customers than private label brands

6. Think about the price elasticity before varying pricesPrivate label brands are twice as sensitive to price gap than national brands

7. Exploit sales promotion strategies Prevent customers from buying private label brands by adopting effective sales techniques like in-store advertisements, incentivise retailers to drive sales

8. Different strategies for different categoriesThink of unique strategies for different product categories

9. Use Profitability as a measure not market share and volume

10.Take private labels seriously

Private label’s share in the modern retail in India is about 7%

Food dominates India's private-label market (76% of total sales)

Private Label Market To Reach $500,000 By 2015 end

Current market share of 4-5%, expected to reach 10% by 2020

Future Group: John Miller, Bare, DJ&C, Indigo Nation, RIG

Reliance: Daily Pure, Reliance select, Reliance value

Tata: Chroma, Landmark, Westside

Aditya Birla: 110%, Enriche, Pantaloons

Reliance fresh stores generate 25% of its sales from in-store brands

Pantaloons gets 50% of its sales from in-store brands Shoppers stop generates 20% Trent shelves contain 95% of in-store brands

Large population price sensitive customers High profit margin in private labels Ability to do fast changes in product design to fit

consumer needs More customer insight

Case Study: Tata Croma

More than 80 % bought Croma because they found value for money

60% didn’t believe it was a quality product 71% strongly agreed upon price affordability

60% people perceived national brands as credible. More than 90% believed that national brand products

are high quality Mixed views about affordability

People buy private label brands because they can’t afford national brands just like people buy android because they can’t afford iPhones

Recommendations to

Indian National Brands

1. Continuous Innovation: Make un-imitable products and protect innovative technologies with IP protection

2. Invest heavily in brand equity: because private labels won’t be able to replicate that

3. Don’t indulge in price wars: it will hurt you. Personal disposable income of Indian customers is increasing, so building better brands and products will give fruits in the long run

Thank You