2. Learning outcomes
• Define own brand
• Differentiate between different versions of retailer own
brand
• Identify routes to create own brands
• Understand phases in the development of own brands
3. Definition and purpose
‘A brand is any word or device (design, shape, sound or
colour) that is used to distinguish one company’s products
from a competitors’. (Berowitz, Kevin & Rudelius)
Branding aims to:
• Give a product character or image – through the name,
packaging and advertising.
• Competitive advantage - create a monopoly (or imperfect
competition) to benefit the brand owner – particularly with
reference to price.
4. Types of brand
• Manufacturer brands. Produced, controlled and
supported (with advertising) by the manufacturer
• Dealer brands. Names given by wholesalers or retailers
to products. These are exclusive to retailers, more
profitable for them and lead to retailer loyalty.
5. Manufacturer brands
Before the 90’s a manufacturer brand meant almost guaranteed
repeat sales and a better than average mark-up
Advantages of manufacturers’ brands:
• Customer demand
• Promotion costs
• Quick sales
• Inventory benefits (lower inventory levels as stock is held by
the manufacturer)
• Quality control
• Prestige
• Historically price maintenance was also a benefit
(Diamond & Pintel)
7. ‘Species’ of retailer brand
(Bhasin et al., 1995, Euromonitor, 1986, KPMG, 2000, Samways, 1995)
• Retailer name brands: using the retailer’s own name
e.g. Tesco standard store brands
• Store sub-brands: carries both name of retailer & sub-brand
e.g. Tesco Finest
• Generic brands: plain label variant of own brand concept
e.g. Value
• Exclusive brands: distributed exclusively by the retailer but
packaged under different names e.g. Tandril detergents, Aldi
• Exclusive products/surrogate brands: not true own-brands
but exclusive to the retailer e.g. Del Monte to Migros
(Switzerland) , until recently Genius at Tesco
8. Versions of own brand programmes
Manufacturer own brand (standard production line)
• Scale economies for manufacturer
• Lower priced own brands for retailer
Specification buying – goods made to buyer’s specification
• retail margin is improved
• helps to establish the retailer’s image
• specifications can be very detailed (e.g. can state what
pesticides are used, how often the packer washes their hands;
details of products and raw materials; production processes;
QC methods, suppliers through the chain)
• But - ‘passing off’ can create issues (new brand has similar
labelling and packaging to a recognised brand and this aims to
confuse the customer. Sales for the own brand usually
increase, but to the detriment of the branded product.
9. Phases in the development of own brand
Situation review and opportunity identification
Concept development and refinement
Product implementation
Evaluation of the new development
Commercialization
Source: Fernie et al
10. Situation review and opportunity identification (1)
• Conduct a full review of the market
• Trend analysis (consumer, competitor, product)
• Identify opportunities for market development
• Review current retail assortment – evaluate re. competitive
position, stage in product life cycle, rate of growth and decline
• Using technology identify the ‘direct product contribution’ of
product categories and specific products as required
11. Situation review and opportunity identification (2)
• Identify strengths and weaknesses of current assortment ,
areas of development opportunity and possible threats
• Review capability of existing supply base to identify future
partners
• Reflect on previous product developments
12. Concept development and refinement
• Seek inspiration
• Is there a competitor offering that could be improved/copied?
• Consider running customer focus groups
• Consult and brief relevant personnel - in-house or outsourced
(designers, food development chefs, specialist technicians)
• May receive unsolicited product concepts
• To reduce risk test attitudes and responses of consumer before
committing
13. Product implementation (1)
Implementation of production, marketing, testing, distribution is
complex and resource intensive. The buyer’s role is:
• Brief suppliers for quality, innovation and cost comparisons
• Confidentiality agreement? (5 years?)
• Request samples and provisional product specifications
• Agree costings
14. Product implementation (2)
• Consider ‘user’ studies (where costs are high) assess feedback
• Present products at a range review for senior management
approval
• Manage packaging requirements
• Pricing structure (scale of prices as production increases . . . )
• Product trial (wide range of customer, coverage, store size)
15. Evaluation of the new development
• Measurement of: sales, profit, sell-through, identifying
average customer transaction values, number of transactions,
demand for substitutes
• Forward planning for successful launches
• Exit strategies for unsuccessful launches
16. Commercialization
• Merchandising team – supply chain control
• Monitor visual merchandising standards
• Ensure in-store product knowledge
• Review remaining assortment for conflict
• Monitor competitor’s reactions
17. Own brand strategy
• Successful own branding is introduced as a positive
strategy not a defensive strategy.
The route to a successful own branding strategy is
• Determine the precise objectives to be fulfilled by the
introduction/extension of the range(s).
• Find appropriate sources of supply must be found that
can deliver the required price-quality mix.
• Through their launch and development, the own
brand(s) must be clearly differentiated both within the
store’s own assortment and within the retail sector as a
whole (McGoldrick)
• The overall objective of own branding must clearly be
to achieve competitive advantage.
18. Own brand strategy
The main advantages can be broadly grouped
as follows:
• Store image/ customer loyalty
• Competitive edge/extra turnover
• Higher profits/better margins
