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Brands vs private labels;david vs goliath

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What is a

BRAND?

What is a PRIVATE

LABEL?

BRANDS VS

PRIVATE

LABELS!!

How are private labels leaving behind such established brands!?

Emergence of New

Channels•Mass Merchandisers• Supermarkets• Distributors

Creation of New

Categories.• Milk• Canned Peas• Toilet Paper• Floor Cleaner• Detergent• Clothing• Other Paper Products..

etc

Improved Profits!

Does this mean that Brand name manufacturers should start making private label goods?

If You Don’t, Don’t Start!

• Can Cannibalize the original brand• Increases the fixed costs• Strategy gets deformed• Double stress on the producer• Finally, declining cash flows &

margins

But, If You Do..Don’t Worry!!

Follow these simple steps.

1.Conduct a private label audit.2.Calculate profitability on both

full-cost and marginal-cost basis.

3.Examine the impact on your brand

4.Finally, close excess capacity!

What actions should

the brands take?

Invest in brand equities.

Innovate wisely.

Use fighting brands

sparingly.

Fighting brand gives the price-sensitive consumer a low-cost alternative!

Build trade

relationships.

Manage the price spread

efficiently!

Take private labels seriously!!

A Case Study.Garg Super Store, located in South Delhi sells it’s own private label named ‘GARG’.

Sells various commodities under the label, such as:• GARG sugar• GARG rice• GARG wheat• GARG flour• GARG pulses• GARG spices• GARG stationary• GARG floor cleaner.. etc

According to the owner:

Most profitable entities:

Disposable plates/cups

paper napkins

other paper products

wheat+flour

pulses

spices

dairy products

beauty products

0 10 20 30 40 50 60 70 80 90100

%age of people choosing label over brand

%age of people choosing label over brand

Created by Raminder Singh, Thapar University during an Internship by Prof. Sameer Mathur, IIM Lucknow.

Bibliography• Kotler’s Marketing Management text book• HBR articles• The Economic Times• Wikipedia• www.nielsen.com• Cnbc tv network• www.araamshop.com• www.retailrise.com• www.business.time.com• www.google.com