Private Label Buyer

What The Brands Are Plotting

November 1, 2006

What The Brands Are Plotting

by Lori Sichtermann

PL Buyer
consulted its sister publication BrandPackaging to find out what the brands are doing when it comes to package design and development.

Well done, private label manufacturers and retailers — you’ve gotten the attention of some heavy-hitting national brands! We’re not talking about begrudged comments about shelf space, instead, the brands are genuinely concerned about the growth and popularity of private label, and how store brands have developed innovative, distinguishable and strong legs of its own. Once considered inferior in quality and design, private label has come back with a vengeance, touting premium lines, sleek value tiers and national-brand-equivalents that, at times, are too equivalent for comfort.
PL Buyer recently contacted its sister publication BrandPackaging to see what the brands think of private label’s growth. The result: PL Buyer obtained the playbook, so to speak, on what the brands are discussing in the huddle in an effort to play against the nationally recognized underdog: private label.
There’s a lot of chatter taking place on the other side of the field, and PL Buyer has broken it down, highlighting what the brands are saying about private label, and how that influences the way brands develop and merchandise products.
Obtain a Plan of Action
According to an article published in BrandPackaging, “Successful brands spend money and manpower to continually develop new and improved products and packaging that enhance differentiation, improve functionality and satisfy unmet consumer needs.” The passage in the article continues to state that store brands simply are not capable of doing such things.
An ironic statement given the parameters of the article — if store brands were entirely incapable of achieving the innovations in functionality and quality as compared to national brands, then why the attention on the part of brands to keep an eye on private label?
Essentially, the brands are relying on their deep pockets to make a difference at the shelf. This is a legitimate, if not predictable, strategy, but private label also has an advantage. Store brands have the ability to use a deep connection with its community to win the customer and his/her loyalty.
Vary Your Assortment
National brand marketers are under the assumption that private label is generally limited to its SKUs that represent a significant portion of sales for retailers. Citing niche items as being the most effective route for national brands to take, since they can produce them more “economically,” the article points to cosmetics as being a prime example of an area “that may not be profitable enough for a retailer to develop.” Regardless of the fact that private label cosmetics is a strong and growing category (see our Category Review on Cosmetics, page 53) national brands perceive niche items as an area in which to surpass private label in the future.
Sell the Product at the Shelf
“Expect the shelf landscape to change around you, potentially accelerating the brand’s decline as branded and private label competitors invest in packaging updates that will leave your brand looking out of touch,” warns the BrandPackaging article.
If there is one area of private label that has seen the most improvement over the past decade, it’s that of product packaging. Gone are the days of the black and white box that condoned the terms “generic.” Today, private label packaging is fresh, innovative, premium-looking, and oftentimes, beautiful. (For more insight on the best in private label packaging, see our 4th Annual Packaging Awards on page 64.)
Essentially, the national brands are acknowledging the strides taken by private label in packaging development and are curious, if not threatened. Private label has been aggressive in packaging development over the past several years. In an effort to compete with the new packaging concepts being developed by private label, store brands have developed a well-defined plan of attack.
“In packaging development, the focus should be on creating more ‘own-able’ innovations that differentiate, deliver added value and, ultimately, help justify price premiums. The key here is developing more structural innovations and proprietary delivery systems, as opposed to settling for ‘graphic refreshes’.”
Give Attention to the Consumer
“To compete against private label, you must also take the customer into account,” the article notes. “National marketers’ strengths lie in targeting consumers of their product better than
the retailer ever can, and turning that knowledge into effective branding that emotionally connects with those consumers and offers them value at any price.”
National brands are making more of a point to focus marketing budgets and packaging design strategies on fulfilling consumers’ emotional needs “in ways store brands can’t.”
However, store brands have the edge in the situation, by being more localized and having the ability to attract the customer more easily than national brands. What’s more, retailers have important customer purchasing data at their disposal.
“Brand marketers need to improve consumer insights to compete with retailers who can do consumer testing far easier and who have reward programs that result in a goldmine of data.”
Take a Proactive Approach
The national brands have taken such notice of private label programs that they are initiating a pre-emptive plan for when
the consumer considers the benefits of each national and store brands.
“Attempt to visually pre-empt the store brand at the shelf, reducing the likelihood that shoppers will actively compare products (i.e. national brand in one hand, store brand in the other.)”
As a pre-emptive measure, national brands are beginning to create horizontal brand blocks, a single row of product, so that shoppers are more likely to compare products within a brand, while vertical shelving makes it more difficult to shop within a brand family. Horizontal brand blocking is more likely to prevent cross-brand comparisons.
Get Your Point Across, Clearly
“In the instance when a shopper is holding your package in one hand and a store brand in another, you want to be sure that your brand ‘owns’ a message and establishes a clear point of difference,” the article sites.
In essence, the brands are taking notice that when it comes to packaging, less is more. While private label has been down this road before, and to the extreme (note black and white “generics” of a decade ago), many store brands are proving that simple, clean and minimalist packaging actually attracts more attention on the shelf.
TOO CLOSE FOR COMFORT
This past year has played host to a number of legal proceedings in which national brands have accused private label manufacturers of creating, and branding, product packaging that’s too similar to the national brand. While the concept of national-brand-equivalent still serves as a foundation for many categories in private label, there’s a line that can’t be crossed, and the brands are accentuating that line by way of a number of law suits against private label manufacturers.
In a recent edition of PL Buyer’s sister publication, BrandPackaging, the topic of the me-too brands, and their likeness to national brands, was discussed in detail.
According to the article published in BrandPackaging, the legal parameters in which a national brand can accuse a store brand of violating trade dress must fall under three points:
• Consumers have come to associate the packaging with the product;
• Consumers confuse the packages, believing a connection exists between them;
• The packaging isn’t just functional, but a recognizable indicator of the brand.

A few private label manufacturers apparently have violated these “rules of the road,” and are being held accountable for their likeness to the national brands. Some of the more notable examples include Procter & Gamble’s (P&G) recent legal proceedings with Vi-Jon Industries.
P&G sued Vi-Jon Industries, alleging that its mouthwash packaging and ad claims infringe on P&G’s Crest Pro-Health oral rinse. What brought attention to the accusation was that Vi-Jon’s product too closely resembled the diamond-shaped bottle, as well as the metallic finish and general color scheme used on P&G’s Pro-Health bottle. The result of the legal proceedings entailed Vi-Jon to withdraw its oral rinse from the market.
Similar in tactical emulation and retribution, earlier this year, The Hershey Co. filed suit against Premier Nutrition, claiming that the packaging of its Twisted candy bar was too similar to Hershey’s Take5 brand, specifically its use of a red background and golden yellow product name.
The legal action taken by The Hershey Co. resulted in Premier Nutrition settling, agreeing to stop using the packaging and to pay Hershey an undisclosed sum to cover legal costs.