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Private labels vs National brands
Private labels, also known as store brands, are products designed, developed, and sold exclusively by retailers. They first emerged in the 1960s as a way for retailers to offer cheaper alternatives to national brands. Private labels now exist to satisfy consumer demand for lower prices as well as to increase retailer profits. While early private labels focused on low price and quality, they have since evolved to match national brands in quality and some even outperform national brands in attributes like value and reliability. Looking ahead, private labels are projected to capture 50% of the global market by 2025 as they continue aligning with national brands. National brands will also continue to thrive by focusing on rare, exclusive, or high-quality products.
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Private labels vs National brands
- 1. PRIVATE LABELS VERSUSNATIONAL BRANDS SAVICA DIMITRIESKA, PH.D FACULTY OF ECONOMICS 25 MARCH 2016
- 2. NATIONAL BRAND –product designed, produced, marketed by a vendor and sold by many retailers National Brand– product of a company!
- 3. A BRAND isnot only a logo, product, name, sign, symbol... but it is a gut feeling, memories, positive emotions about a product, service or a company
- 4. BRAND IS ABRAND because of: А) Identification B) Differentiation
- 5. BRAND IS ABRAND because of: C) RADICAL Differentiation
- 6. NATIONAL BRAND– weall recognize it!
- 7. NATIONAL BRAND– weall recognize it!
- 8. PRIVATE LABEL (STOREBRAND) – structural changes in 1960-es: Lots of retailers, supermarkets, shops, trade chains (Trade concentration – excessive capital)
- 9. PRIVATE LABEL –product designed, developed, promoted and sold by retailers & distributors FIRST IDEA: To oppose National brands
- 10. WHY DO PRIVATELABELS EXIST?
- 11. WHY DO PRIVATELABELS EXIST? Unsatisfied needs of consumers Need of cheaper and special products in the market Financial crisis and lower standard of living Higher profit margins
- 12. NATIONAL BRANDS– everywhere! PRIVATELABELS – only in retailer outlets! PRIVATE LABELS – low costs, low prices! (low/ no costs for promotion & distribution)
- 13. PRIVATE LABELS –GROCERY AND FOOD PRODUCTS FIRST!
- 14. http://www.storebrandsdecisions.com/news/2011/04/19/price-study-pl-saves-shoppers-upwards-of-33- percent- SAVINGS = 13,38$ National brand Store brand Unit price in $ Unit price in $ American cheese 4,29 2,79 Bagged salad 2,63 2,76 BBQ Sauce 1,50 1,21 Bottled water 5,66 3,97 Canned corn 1,13 0,75 Carbonated beverage 1,61 0,86 Corn flakes 3,79 2,64 Grape jelly 2,19 1,59 Hamburger pickles 2,19 2,19 Hot dogs 2,99 1,69 Ice cream 4,66 2,56 Ice tea 3,79 2,63 Mustard 1,91 1,61 Onion dip 2,29 1,50 Packaged maccaroni 1,00 0,68 Spagetti & Noodles 1,30 0,91 Soda crackers 2,53 1,74 TOTAL 45,46 32,08 FOOD PRODUCTS
- 15. http://www.storebrandsdecisions.com/news/2011/04/19/price-study-pl-saves-shoppers-upwards-of-33- percent- SAVINGS = 18,02$ National brand Store brand Unit price in $ Unit price in $ Adhesive bandages 2,50 2,31 Aluminium foil 4,25 2,50 Aspirin 5,69 2,24 Body lotion 9,66 4,49 Charcoal 5,99 4,99 Disinfecting wipe 3,65 2,29 Facial tissue 2,00 1,00 Glass cleaner 2,50 2,00 Mouthwash 4,99 3,00 Paper napkins 2,29 1,79 Paper plates 3,19 2,29 Toilet paper 1,00 0,79 TOTAL 47,71 29,69 NON FOOD ITEMS
- 16. PRIVATE LABELS –What consumers think? http://www.hartman-group.com/hartbeat/323/the-opportunity-for-national-brands-in- an-era-of-private-label I get the most bang for my buck 44% It is a brand I grew up with 42% It is often on sale 43% It has a unique flavor 39% It was the lowest price on the shelf 43% It is of predictable (reliable) quality 37% It is of predictable (reliable) quality 18% It is often on sale 31% Simple, real ingredients 17% It is more nutritious than other brands 24% I trust the store 15% I like the company that makes it 23% MOST IMPORTANT ATTRIBUTES PRIVATE LABELS NATIONAL BRANDS
- 17. Global statistics onprivate labels http://www.nielsen.com/us/en/insights/news/2014/private-label-powerhouses--europe-and-north- america.html
- 18. EVOLUTION OF PRIVATELABELS First Phase: low prices, low quality!
- 19. EVOLUTION OF PRIVATELABELS Second Phase: some identity elements!
- 20. EVOLUTION OF PRIVATELABELS Third Phase: higher quality! Next Phase: Private labels leadership! Aligning Private with National Brands!
- 21. STRATEGIES of NationalBrands against Private Labels А. Innovation and new products
- 22. B. Higher valuefor the same amount of money! C. Lower price for the same value! (unpopular strategy!) D Imitation of products with low quality and low price! E. Without taking any steps! (until private brands rise their prices!) STRATEGIES of National Brands against Private Labels
- 23. STRATEGIES of NationalBrands against Private Labels E. Producing for Retailers!
- 24. Private Brands inMacedonia
- 25. Private Brands inMacedonia
- 26. FUTURE OF BRANDS А.Private (Store) Brands will increase! Share of private brands in the global market will reach 50% by 2025!!
- 27. FUTURE OF BRANDS B.National Brands will increase! Dominant brands where products are rare, expensive, exclusive, special!
- 28. Whoever said moneycan't buy happiness simply didn't know where to go shopping. Shop everywhere and everything! ~Bo Derek