Uploaded byDr. Chandan Vichoray
18 private labels
This document discusses private label products. It defines private labels as store-branded products that can only be purchased at a particular store. Private labels are classified as store brands carrying the retailer's name, umbrella brands used across categories, and individual brands created for specific markets. Private labels provide value by offering unique, competitively priced products that help retailers earn higher margins through in-house design, promotion, and distribution. The evolution of private labels has moved from generic substitutes to niche, value-added products comparable or superior to name brands. Creating a successful private label involves defining objectives, identifying market gaps, deciding whether to manufacture internally or outsource, establishing marketing strategy, and setting performance metrics.
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18 private labels
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- 2. Concept of PrivateLabels Name can be the store’s name or a name created exclusively by the store Can be bought at the store only Some of the private labels
- 3. Classification of PrivateLabels Store Brand Which carries the retailer’s name such as Westside, Foodworld, Big Bazaar Umbrella Brand Common brand across multiple categories – e.g. Bare from pantaloons, Splash from Lifestyle Individual Brands Specific brand names created for specific market segments and / or categories
- 4. The Need forPrivate Labels Private Labels act as value added marketing differentiator Bringing unique products within the range of the customer by pricing it aggressively thus creating a competitive advantage Lesser costs on account of in-house designing, merchandising, outsourcing and distributions In store promotions brings down the cost of promotion
- 5. The Need forPrivate Labels Need for a Private Label Identification of Need Gap Need to create unique merchandise Creating Customer Loyalty Need to Earn increased margins Changing Consumer Habits
- 6. The Evolution ofPrivate Labels Generic Product offerings towards price value proposition Inspires less confidence and trust as it is a substitute for the real thing Increases business and builds customer loyalty Evolution from cheaper substitutes to niche products like Wellness products Core products Expertise Aspirational
- 7. The Evolution ofPrivate Labels 1st Generation 2nd Generation 3rd Generation 4th Generation Type of Brand Generic No Name Brand free Unbranded Quasi Brand Own Label Own Brand Extended own brand i.e. segmented own brand Strategy Generics Cheapest Price Me-Too Value Added Objective Increase Margins Providing Choice in Pricing Increase Margins Reduce manufacturer’s power by setting entry price Provide better value product Enhance category margins Expand product assortments Build retailer’s image among customers Increase and retain client base Enhance category margins Improve image further Differentiation
- 8. The Evolution ofPrivate Labels 1st Generation 2nd Generation 3rd Generation 4th Generation Product Basic and functional products One-off staple lines with a large volume Big Products category Image forming product groups Large number of products with small volumes (niche) Technology Simple production process and basic technology lagging behind market leader Technology still lagging behind market leaders Close to the brand leader Innovative technology
- 9. The Evolution ofPrivate Labels 1st Generation 2nd Generation 3rd Generation 4th Generation Quality / Image Lower image and inferior image compared to the manufacturer’s brands Medium quality but still perceived as lower than leading manufacturer’s brands Secondary brand, alongside the leading manufacturer’s brand Comparable to market leaders Same or better than market leaders Innovative and different products from brand leaders Approximate Pricing 20% or more below brand leader 10-20% below 5-10% below Equal or higher than known brand Consumer’s motivation to Price Price Both quality and price i.e. Better and unique products
- 10. Process of PrivateLabel Creation Defining Objective Factors like creating differentiation, wide product range, enhancing margins Defining Gaps in the Market Gaps can be price gaps, offerings gaps, etc Decision on make or buy and Sourcing Checking on own’s SWOT Determine the Marketing and Sales Strategy Determine the Measures of performance Creating metrics of measurement