Analysis of Brands Versus Private Labels: Fighting to Win(HBR article)

1. Threat of private
labels to national
brands

2. vsVS
What are private labels?

3. Why do retailers prefer private-labels?

4. 1. Higher profit margin
Reduce
costs of
delivery
Eliminates
the middle
man
Increases
supply chain
efficiencies

5. 2. Makes the retailer “different”

6. 3. Set your own pricing

7. 4. Saveguard against economic downturns

8. Trent
Reliance Retail
Pantaloons
Nilgiris
Piramyd
Food world
% of Private Label sales
0 22.5 45 67.5 90
Major private label retailers in India

9. The growing threat?
The reasons….

10. 1. Improved product quality in private labels

11. 2. Development of premium private labels

12. 3. The European success

13. 4. Entry in newer categories

14. Then,is this the
end of national
brands?

15. People love brands!

16. Brands have a head start!

17. Stronger economy=Stronger brand!

18. Brands are crowd pullers for retailers!

19. Should brands then
manufacture for private-
labels?

20. The pros
Use that
excess
manufacturing
capacity!

21. The pros
Better market
control

22. The pros
Competitive
advantage!

23. The cons
Strained manufacturer-retailer relations

24. The cons
Increased
manufacturing
and distribution
complexities

25. The cons
Can hurt your own brand!

26. The best advice?
“If you don’t,
don’t start!”

27. If you
already
do,well….

28. Evaluate private-label business:
• Do a private-label audit
• Evaluate business on full costs rather than
incremental costs
• Examine the effect on your brand
• Close that excess capacity

29. How to defend against private-labels?

30. Make your brand strong:
Invest in brand equity!

31. Innovate: With caution

32. Using fighting brands

33. Build relationships
Know your customer Teach your retailer

34. Manage each
category: Know your
product

35. Exploit sales-promotion tactic: Capture
that retail space!

36. Lastly.. Do not
underestimate the
private-label threat!

37. Reference
HBR:Brands Versus Private Labels: Fighting to Win
Version inJan-Feb 1996
Marketing Management: A South Asian Perspective; Philip Kotler,Kevin
Keller,Abraham Koshy, Mithileshwar Jha
Under the guidance of :
Prof Sameer Mathur,IIM
Lucknow