brands vs private label
TRANSCRIPT
Brands versus Private Labels: Fighting to Win
Group 2| Section AEkta(PGP30134)|Jay (PGP30080)|Udit (PGP30114)|Shahbaz(PGP30379)|Mit (PGP30207)
Why do retailers prefer Private Labels ?
Should Brands Manufacture Private Labels ?
Is this the end of the national brand ?
Growing Threat !!!
Recommendations !!!
1. Higher Profit Margin
Marketing
Activity
Customer Mind
Set
Market Performance
Shareholder Value
Supply Chain
Efficiency
Reduced cost of delivery
Eliminates middle men
Marketplace Conditions Multiplier
3. Set their own pricing
Save yourself when
economy fails
Select the optimum price
Nielsen: Price primary driver for purchase
intent
INDIAPrice Conscious
Market + InflationPRIVATE LABELS
PRICE acts as a Point of Difference (POD) to compete versus the established brands
1. Improved product quality in Private Labels
Spencers Launched Smart Choice
CookiesQuality+ Low Price
Bharti Walmart’s Great Value tops
floor cleaning segment with 50%
share
High standards
Advent of foreign brands
Quality Private Label
POP
2. Development of Premium Private Label brands
Tesco Finest chocolates sell at a price index of 150 versus
Cadburys
Reliance Mart’s 3 TierEconomy | Standard |
Premium
3. European supermarkets’ success with Private Labels
36%Private label share of total
CPG sales
70Avg price index of private label
vs Brands
4%Increase in the
average number of private label
lines
1. Brands positively influence the purchase decision
Marketing Activity
Customer Mind Set
Market Performance
Shareholder Value
3. Stronger economy strengthens the Brand Equity
Strength of private label varies with the economic conditions
Disadvantages
Cannibalization
Increased mfg. & distribution complexities
Strained manufacturer-retailer relationship
1. Evaluate the private label business
DO A PRIVATE LABEL AUDIT
CALCULATE PROFITABILITY ON FULL COSTS
EXAMINE POSSIBILITY OF CANNIBALIZATION
SHUTDOWN THE EXCESS CAPACITY
DO A PRIVATE LABEL AUDIT
CALCULATE PROFITABILITY ON FULL COSTS
EXAMINE POSSIBILITY OF CANNIBALIZATION
SHUTDOWN THE EXCESS CAPACITY
1. Evaluate the private label business
DO A PRIVATE LABEL AUDIT
CALCULATE PROFITABILITY ON FULL COSTS
EXAMINE POSSIBILITY OF CANNIBALIZATION
SHUTDOWN THE EXCESS CAPACITY
1. Evaluate the private label business
DO A PRIVATE LABEL AUDIT
CALCULATE PROFITABILITY ON FULL COSTS
EXAMINE POSSIBILITY OF CANNIBALIZATION
SHUTDOWN THE EXCESS CAPACITY
1. Evaluate the private label business
4. Use fighting brands sparingly
THE PURPOSE IS TO GIVE THE COST SENSITIVE CUSTOMER A LOW COST ALTERNATIVE
5. Build trade relationships: Know your Customers
Teach your Retailers and subsidize in-store experiments
Future prospects of Private Label in India
There is a huge opportunity for Private Label manufacturers/retailers because of uncertain economic conditions, high inflation rates, consumer behavior is towards quality and high price sensitivity.