private labels vs national brands

PRIVATE LABELS VERSUS NATIONAL BRANDS

SAVICA DIMITRIESKA, PH.DFACULTY OF ECONOMICS

25 MARCH 2016

NATIONAL BRAND – product designed, produced, marketed by a vendor and sold by many retailers

National Brand– product of a company!

A BRAND is not only a logo, product, name, sign, symbol...

but it is a gut feeling, memories, positive emotions about a product, service or a company

BRAND IS A BRAND because of:

А) Identification B) Differentiation

BRAND IS A BRAND because of:

C) RADICAL Differentiation

NATIONAL BRAND– we all recognize it!

PRIVATE LABEL (STORE BRAND) – structural changes in 1960-es:

Lots of retailers, supermarkets, shops, trade chains (Trade concentration – excessive capital)

PRIVATE LABEL – product designed, developed, promoted and sold by retailers & distributors

FIRST IDEA: To oppose National brands

WHY DO PRIVATE LABELS EXIST?

WHY DO PRIVATE LABELS EXIST?

Unsatisfied needs of consumersNeed of cheaper and special products in the marketFinancial crisis and lower standard of living

Higher profit margins

NATIONAL BRANDS– everywhere!PRIVATE LABELS – only in retailer outlets!

PRIVATE LABELS – low costs, low prices!(low/ no costs for promotion & distribution)

PRIVATE LABELS – GROCERY AND FOOD PRODUCTS FIRST!

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 2,79Bagged salad 2,63 2,76BBQ Sauce 1,50 1,21Bottled water 5,66 3,97Canned corn 1,13 0,75Carbonated beverage 1,61 0,86Corn flakes 3,79 2,64Grape jelly 2,19 1,59Hamburger pickles 2,19 2,19Hot dogs 2,99 1,69Ice cream 4,66 2,56Ice tea 3,79 2,63Mustard 1,91 1,61Onion dip 2,29 1,50Packaged maccaroni 1,00 0,68Spagetti & Noodles 1,30 0,91Soda crackers 2,53 1,74TOTAL 45,46 32,08

FOOD PRODUCTS

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 2,50Aspirin 5,69 2,24

Body lotion 9,66 4,49Charcoal 5,99 4,99Disinfecting wipe 3,65 2,29Facial tissue 2,00 1,00

Glass cleaner 2,50 2,00

Mouthwash 4,99 3,00Paper napkins 2,29 1,79

Paper plates 3,19 2,29

Toilet paper 1,00 0,79TOTAL 47,71 29,69

NON FOOD ITEMS

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 ATTRIBUTESPRIVATE LABELS NATIONAL BRANDS

Global statistics on private labels

http://www.nielsen.com/us/en/insights/news/2014/private-label-powerhouses--europe-and-north-america.html

EVOLUTION OF PRIVATE LABELS

First Phase: low prices, low quality!


Second Phase: some identity elements!


Third Phase: higher quality!

Next Phase: Private labels leadership!

Aligning Private with National Brands!

STRATEGIES of National Brands against

Private LabelsА. Innovation and new products

B. Higher value for 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

STRATEGIES of National Brands against Private Labels

E. Producing for Retailers!

Private Brands in Macedonia

FUTURE OF BRANDS

А. Private (Store) Brands will increase!Share of private brands in the global market will reach 50% by 2025!!

FUTURE OF BRANDS B. National Brands will increase! Dominant brands where products are rare, expensive, exclusive, special!

Whoever said money can't buy happiness simply didn't know where to go shopping. Shop everywhere and everything!

~Bo Derek

private labels vs national brands

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