2. PRIVATE LABELING
Presented by
Paluru munesh
Vignan university
Vadlamudi.

3. WHAT IS PRIVATE LABELING?
products or services are typically those
manufactured or provided by one company
for offer under another company's brand.
They are often positioned as lower cost
alternatives to regional, national or
international brands.

4. WHY PRIVATE LABELING?
Burgeoning Middle-class
Changing Lifestyle
Consumer Choices
Regional Preferences
Demand Growth @ higher trajectory
Enter early birds
Critical factors for high-end users
Market Expansion

5. BURGEONING MIDDLE-CLASS
182 million families;
strong upward mobility due rising
incomes and aspirations
Incomes influencing lifestyles
Higher propensity to consume

6. CHANGING LIFESTYLE
Urbanization (cramped houses);
nuclear families; Working women
Quality & health conscious
Convenience; Eating-out turning
fashionable;
Demonstration effect

7. CONSUMER CHOICES
Local flavour preferred; do imported
pulses meet local need? organoleptic tests
necessary;
Demand price elastic; high prices lead to
substitution with cereals; some cases with
low cost pulses

8. REGIONAL PREFERENCES
Gram: across India;
Pigeon pea: central & south India
Black matpe: across India; but strong southern
demand;
Moongbean: east India, Mah’tra
Lentils: north and east India

9. BUYING HABITS
Most buy from small retail units that sell loose;
purchase quantum depends on income level;
Frequency & quantity purchased decline as
incomes rise;
Prepackaged pulses at co-op stores & private
retail chains

10. DEMAND GROWTH @
HIGHER TRAJECTORY
Rising institutional demand
Households want clean, graded, hygienic, packaged,
ready-to-cook ingredients
Urbanites now make do with convenience (not freshly
cooked)
Food safety & food quality

11. ENTER EARLY BIRDS
Entry of corporates;
Retail revolution; Supermarkets mushrooming
Private labels; no national brands
Regional value-added products – food habits in
India change every 100 kms!!!

12. CRITICAL FACTORS FOR
HIGH-END USERS
Quality, size, shape, colour, cooking time,
taste;
20% consumption by high-end ( 3 mn.t.)
and growing
Little product differentiation; so, quality
assurance is key

13. MARKET EXPANSION
Market expanding organically
Trade can accelerate by lobbying
government to include pulses in welfare
programs – PDS, midday meal, food-for-
work schemes;

15. Store brands - The retailer's name is very
evident on the packaging.
Store sub-brands - Products where the
retailer's name is low-key on the packaging.
 Umbrella branding - A generic brand,
independent from the name of the retailer.
TYPES OF PRIVATE LABEL

16. CONTD……
Individual brands - A name used in one
category, this is only used to promote a
"real" discount product line.
 Exclusive brands - Again a name used
in one category, but to promote "added
value" products within the category

17. FUTURE OF PRIVATE LABELS
Becoming national premium lifestyle brands:
TATA WESTSIDE
Branching out to create specialty chain business:
VISHAL MEGAMART ,RELIANCE FRESH
Increasing depth of multi dimensional
merchandising product mix (Tony Hawk mens,
boys, footwear and etc)
Spin off PL brands (Aeropostale)
Cannibalize weaker PL brands

18. OVERVIEW
Worldwide Private Label retail sales have passed
US$1 trillion
2006 US apparel & shoes retail sales: $358.6
Billion
2006: 45% apparel sales were private label
2005: 39% apparel sales were private label
2002: 35% apparel sales were private label
By 2010, private label merchandise expects to
increase by 22% to 55% of total apparel sales

19. PRIVATE LABEL PROS & CONS
PROS:
Exclusivity & differentiation
Bring customer loyalty
Better margin
Better control in deliveries
Brand equity
Freedom in pricing strategy
Increase bargaining power with
both national brands and PL factories
CONS:
Inventory risk
Higher R&D expense
Higher marketing expense
No markdown or return allowance
from branded suppliers
If product fails, will create negative
image
Quality control, complex
production & import issues

20. WHAT THIS MEANS
To differentiate
To gain and maintain consumer loyalty
To achieve higher gross margin
To compete with national brands
Private brands will continue to play an important part
of the assortment to their growth strategy
Become national lifestyle premium brands
Deploy a multi-layer strategy in brand, price and
quality
Cannibalize weaker private and national brands