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