PRIVATE LABEL

INTRODUCTION OF PRIVATE LABEL

 Manufactured or provided by one company for offer
under another company's brand.

 Available in a wide range of industries.

 Positioned as lower cost alternatives to regional, national

or international brands.
DEFINITION OF PRIVATE LABEL
 Brand owned not by a
manufacturer or producer
but by a retailer or
supplier who gets its
goods made by a contract
manufacturer under its
own label.
TYPES OF PRIVATE LABEL
 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.
ADVANTAGES OF PRIVATE LABEL
 Lower Prices

 Better Margins

 Offer consumer greater

value

 Bargaining power to the

retailer
 DISADVANTAGES OF PRIVATE LABEL
 Conflict with other brands in the category.

 Higher R&D expense

 Higher marketing expense

 If product fails, will create negative image

 Inventory risk
CONSUMER PERCEPTION
 People buy more private
label.

 They dont need the

brands.

 People has accepted

Private Label.
STORY WHEN PRIVATE LABEL CAME
INTO PICTURE
1)In 19th century ,consumer moved from no name brand to
branded product.

2)The manufacturers uses the media

3) The branded message to consumer was one of the smart

shopping

4)In 20th century, retailer were small ,leads the brand

manufacturer to establish their power over distribution channels.
CONTI………

5)In 1970’s retailer started to develop their national chains like

metro, expanded internationally & consolidated to global
player.
6)The retail started to sell non-CPG product,e.g walmart sales
were $150 billion on non-CPG.
7)Private label refer as own label,store brands,distributed-owned
brands
8)Global private label now approach one trillion dollars.
9)Traditionally, the image of private label was cheap and nasty
substitute because of its packaging, but now changed……..
10)some of private label were high quality but less than the
manufacturer brand because of discounting factor.
company Total Private Private Sales($ company
sales($ label % label billion)
billion) sales($
billion)
1)Wal-Mart 316 40 126 75 1.nestle

2)Metro 73 35 26 57 2.P & G

3)Tesco 71 50 36 51 3.Johnson
& Johnson

4)Kroger 61 24 15 50 4.Unilever

4)royal 56 48 27 33 5.Pepsico.
Ahoid
IS PL ARE BRANDS!

1)Any product is not brand have limited market appeal.

2)Because of more investing in pl was successful and they
position the pl in their own rights.
3)Pl share increases from 33 % to 50 %in dozen years, increase
in emotion and imagery then a functional logic.
4) Gives more importance to aware the customer.
5)Two types of store brands:
i)premium lite:”better and cheaper "sold at discount.
ii)premium price: high in price, superior in quality. but
cheaper then…….
BENEFIT OF PREMIUM LITE PRODUCT

 Margin is high

 Not much spending on ads….as manufacture brand do…..

 Helps to raise the image .

 Rated in the top ten brand in many category.

 Upgrading the pl products.

PL STRATEGIES
 Managing the price gap in the pl by varying the price

 Recognize that consumers are quality sensitive then price

sensitive.

 Highly competitive- same or better quality at…

 Higher gross margin(i.e. 58 %- 68%)

 Biggest threat to national brand.

 Brand loyalty because of the differentiation, end of the

season sale
BETTER PROFIT MARGIN ON PL

 important reason for carrying pl by retailer.

 Generate high margin because:
i)supplier have no market power.
ii)product differentiation is absent.
iii)sell to professional retailer buyers who are well
informed about the quality and availability.
 Gross margin on pl is 25-30%,high in health and cosmetic
category,then……..
 Retailer put more emphasis on pl.
 Customer in particular category divide into 4 groups…
brand buyers,pl buyers, random buyers, toss-ups.
WHY THE GROWTH?
 Consolidation of retailers
 Brands sell to same retailers and become a commodity
 Retailers need differentiation and better margin
 Declining retail prices (women’s apparel prices dropped
2.4% 2007 vs. ‘06)
 Globalization of Production
NATIONAL BRAND COUNTER STRATEGIES
 Develop unique products and stay ahead as a trend leader
 Create own stores
 Develop a compelling marketing strategy
 Increase brand loyalty
 Combine effort by offering exclusive lines. I.e, Simply Vera,
American Living, Liz & Co
 Create one shot exclusive deliveries and SKUS
 Evaluate sourcing strategy and production cost
 Maintain net price (minimal promotions & discounts)
 Improve forecasting and turn around time
 What This Means
National brand should.
 Change mind set and realize that Private Labels are
competing brands
 Innovate and stay as market leaders to beat PL
 Stay focused on target audience
 Increase and market brand imagery to gain and maintain
customer loyalty
 Partner with retailers to produce exclusive brands,
SKUS, one-time offers or lines
 Price competitively and streamline expenses
SOME INDIAN PL

 Mochi Ka Juta
 Food Bazaar

 Pantaloon

 Westside

 Naturals

 Reliance fresh
10 P’S OF PL

1. Product: quality is equal to national brand.

2. Partnership: work in extra mile in terms of support,
marketing, merchandising etc.
3. Planogram: ensuring every product leads to sales and profit,
delist the slow movers.
4. Packaging: reflect quality and performance of overall
brand & from inside as first impression….,as 70% of
purchase decision only at pop.
5. Pricing: provides the high perceived value to customer
Without leaving profit.
6. Position: position mark the one that you want to
compete directly against …….
7. push: let the branded player spend money to develop category
awareness, once customer in store, retailer have major impact.
8. personnel:
9. promotion: by display and through features to gain customer
attention.
10. pride: take pride in your brand, treat it and market it with the
respect it deserves.
WHAT PRODUCTS ARE SOLD AS STORE
BRANDS?

Major supermarkets, drug chains and mass merchandisers

today offer:
 These include full lines of fresh, frozen and
refrigerated food.
 canned and dry foods
 snacks, ethnic specialties
 pet foods
 health and beauty care
 over-the-counter drugs
 cosmetics, household and laundry products, lawn and
garden chemicals, paints, hardware, auto aftercare,
stationery, and housewares. E.t.c.
WHO MAKES STORE BRANDS?

1) Large national brand manufacturers: that utilize their

expertise and excess plant capacity to supply store brands
2) Small, quality manufacturers :who specialize in particular
product lines.
3) retailers and wholesalers: that own their own manufacturing
facilities.
4) Regional brand manufacturers that produce private label
products for specific markets
STORE BRANDS IN INDIA:

1) As retail is still under unorganized structure.

2) it contributes a turnover of Rs.700 Cr in the organized
structure.
3) India is expected to achieve a sizeable volume in the coming 3-
5 years.
4) store brands include mainly food and apparel industry.     
 RETAIL PLAYERS HAVING STORE BRANDS IN INDIA ARE

FOOD AND GROCERY FASHION OTHERS

Spencer's Daily Shoppers' Stop Vivek's

Adani- Rajiv's Westside Planet M

Subhiksha Lifestyle Music World

Nilgris Piramyd Crossword

Nirma-Radhey Ebony Gautier

  Globus Lifespring