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Cover Story - Anatomy of PL Branding

Anatomy of Private Label Branding

August 28, 2012
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Like the human body, when it comes to private label branding, there are many parts and pieces that need to work together to function properly.

When it comes to retailers branding their private labels, there are many parts and pieces that need to work together to function properly, much like the human body.

Making The Connection – The Brain

Making a connection with customers is a big part of a retailer branding its private label.

Retailers can enhance their connections with shoppers by leveraging private label, doing things such as including private label products as rewards for in-store games, contests and events, according to Jon Hauptman, partner at Barrington, Ill.-based consulting firm Willard Bishop. “Retailers can also solicit shopper feedback into existing private label products and new types of private label items shoppers would like to see,” he says. “Telling stories about private label, such as team members’ favorite private label products and how they use them, and/or stories about the retailer’s search to find the product and bring it back to their shoppers also can prove beneficial. Stories bring the products and the stores to life, and private label can serve as an outstanding topic for such stories.”

Private brand and marketing used to be oxymoronic, says Carol Spieckerman, president of Bentonville, Ark.-based consulting firm newmarketbuilders.

“It’s a step in the right direction that retailers are promoting their private brands on their websites and backing that up with event marketing,” she says. “The next phase, which has already started, will be for retailers to leverage insights gleaned from social media to develop brands, not just market them.

“Unlike traditional POS data, social media gives an unprecedented glimpse into consumers’ activities and interests that will provide powerful insights for private brand creation.”

Ideally, retailers have a strong brand positioning that also is captured in their private brands, notes Terry Lee, founder of Private Brand Advisors.

“A good example of this is Trader Joe’s,” he says. “Their retail brand positioning is very clear, and their brand personality is reinforced in their private label in the form of type of products, brand names, product names, and packaging design. This is reinforced in their print vehicles with clever stories about the products.

“Of course, this requires a retailer to have a strong brand positioning to start with.”

It is imperative for retailers to build brands based on consumer insight, says Todd Maute, partner at N.Y.-based CBX.

“If retailers create, design and merchandise brands that will mean something to the consumer, versus just building brands and products that offer a lower cost in the category, they should be able to create that connection,” he says.

Consumers have a lot of choices when it comes to brands, so what can you do as a retailer to make them see that your private label brand is the best?

Increasingly, presentation and merchandising play a big role because that is the aspect that retailers uniquely control, Spieckerman says.

Get Consumers To See Your Brand As Best – The Eyes

“Retailers have an opportunity to look at the entire store as a showcase for their private brands and to develop cohesive, store-wide presentation schemes that tell a story, rather than working category-by-category,” she says.

As with all brands, it starts with having a product that meets a consumer need, Lee adds.

Keys To Private Label Branding

  • Retailers should position private label as a complement to their overall go-to market strategy and as one of the “ways to save” while shopping their store.
  • Ensure that the quality of private label is acceptably high so shoppers do not feel that they are compromising quality to save money.
  • Include fun, interesting, and indulgent items as part of the private label offering. This will generate a positive image of the private brand and encourage trial.
  • Don’t think of private label branding as being different. It has different challenges, but retailers also have different strategies and tactics they can use to build brand than manufacturers do.
  • Differentiation and separation are critical, especially as branding becomes the only point of differentiation between retailers in many cases and as price transparency ensures a more level playing field for national brands.
  • Retailers need to have a deeper understanding of their customers by going beyond traditional insights driven by demographic profiles and getting into the consumer psyche, understanding their needs, wants and desires.
  • Understand the market, your competition, and the dynamics not only of a given category, but also how consumers behave in that category.
  • A retail brand needs to support, enhance and develop the retailers’ desired position in the marketplace.

“Retailers have the opportunity to create products that are targeted towards their specific customer base versus the national audience,” he says. “Creating awareness and trial is critical to the success of a good product. This is where retailers must invest and leverage better the marketing elements they control – for example, in-store, websites, print ads, etc.”

Retailers can generate interest and trial of their private brands by doing several things, Hauptman says.

“Highlight private label items at the shelf so they’re easy to find, for example, merchandising them at eye level and ‘over-facing’ to create a banner effect at the shelf,” he says. “Quantify the savings associated with trading to private label versus purchasing corresponding national brands at the shelf via shelf talkers or through basket comparisons at the front of the store. Reduce the risk associated with trying new private label items by sampling private label products in-store, offering a money back guarantee on private label items, and highlighting private label items that are top-sellers in their categories.”

Retailers also don’t truly understand the value of great design, Maute adds.

“Many companies have built their entire business on great design and clearly defined brand strategies,” he says. “A consumer’s reason to believe and behavior in a given category vary differently. Consumers’ purchase intent in cereal varies greatly from that in frozen commodities. Understanding that behavior will allow retailers to effectively create relevant brands and appealing designs that will attract consumers.

“Additionally, retailers need to understand that packaging is not the only key driver in stimulating purchase intent at the shelf. Merchandising your brands in a proud and relevant way will present the brands role and purpose and stimulate trial. Smart pricing, promotion, and even store design will also enhance the perceived value and essence of that brand.”

Various Brands Should Be Connected – The Muscles

It’s extremely important to have all private label brands connected under a single program that shoppers understand, Hauptman says, and that is particularly important for retailers with a three- or four-brand private label offering with national brand equivalent items flanked by value-tier items on the low price side and premium and/or natural and organic items on the upper-tier side.

“That way they’ll give the retailer full credit for their interesting and budget-stretching private label products,” he says.

Spieckerman also says it’s important for retailers to maintain cohesion. And based on the portfolio pairings and adjustments that retailers have embarked upon, particularly in the drug channel, they obviously see the need for it.

However, Maute says he’s not sure it’s critically important to have cohesion when it comes to their various tiers/subgroups of private label brands.

“Each brand should speak to a consumer target or business objective directly, and sometimes these drivers will vary greatly,” he says. “I also don’t think that retailers should just build brands driven by product attributes or quality levels. This approach means that the product’s driving the development versus the customer need.

“We recommend an approach that focuses on developing brands that you can win with in key areas of business, others that you can differentiate with, and others that you can compete with. Depending on the target customer or category, the role of the private label brand will vary.

“Retailers should be developing brands that meet a business objective both quantitatively and qualitatively … this may not always be driven by traditional tiering methodologies.”

 

Have A Consistent And Compelling Brand Voice – The Mouth

To have a consistent and compelling brand voice, retailers need to understand the role that private brands play within their business.

Understanding their role is complicated, but critical, Spieckerman says. She says the most important part is a willingness to change and not get entrenched.

“Private brands are powerful and unique advantages for retailers, and as they expand their physical and digital platforms, the opportunity to build equity and affinity for them has never been greater,” she says.

In many retailers, private brand programs still play the role of a source of products with greater margins compared with national or regional brands, Lee says.

“These retailers are failing to leverage their programs to deliver greater value by utilizing it as a major piece of a retailer’s efforts to build an overall brand image that differentiates it from its competitors,” he says.

If a retailer has a good understanding of who they want to be, what their brand stands for and what differentiates them from the competition, they easily can integrate a structured go-to-market strategy that will help support that desired position.

 

Find A Spirit To Fuel Your Brand – The Heart

There are some retailers that really put their heart into it and take a unique approach to private label branding.

Some retailers that stand out for their private label branding are Safeway, Duane Reade, Walgreens and Tesco.

“Safeway has done a great job with building brands on consumer insight and need,” Maute says. “Brands such as moms to mom, Open Nature and Eating Right, all appeal to a different consumer based on the life stage or need in the category.”

Although not necessarily new, retailers are becoming more sophisticated in creating brands that are most targeted within categories or consumer segments, Lee says.

“They are moving away from utilizing ‘banner brands’ and creating brands that are tightly targeted,” he says. “CVS for example, created the Nuance Salma Hayek brand that is a combination of a well-known brand, Salma Hayek, and the word Nuance, which is very beauty category specific.”

Fairway Market in New York leverages its Fairway Market private label brand to set a high quality tone in their stores, Hauptman says.

“Their Fairway Market brand items are unique, high-quality, signature products that are positioned as different and better than traditional national brands, thereby reinforcing the retailer’s high-quality, wide variety image,” he says.

The basics of creating retailer owned brands are almost identical to the basics of creating any brand, says Christopher Durham, founder of myprivatebrand.com.

“The real key is understanding the opportunities for retailers to build brands with significantly larger and more compelling consumer propositions than national brand manufacturers,” he says. “No matter how well a manufacturer knows its consumer, the brands they create are still restricted by the products they manufacture. Retailers have the ability to source any product at any quality level from anywhere in the world and to create a brand that truly solves [the consumer’s] problems.”

Additionally, retailers must understand who they are and what makes them different and unique, Durham says. They must understand that price and selection are not differentiators, and to be successful, they must create a brand that engages consumers in their hearts as well as their wallets.

“If they cannot articulate that difference, consumers will not engage with them as anything more than the generic grocer or corner drugstore that they are,” he says. “Once this is established, a robust portfolio of private brands may have brands that reinforce the overarching retail positioning, or it may have brands that add to the original retail positioning.

“Ultimately, the retailer must ask himself or herself what roles each brand will play in their portfolio and how much they will invest to bring that role to life.”

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