(5) Retail branding Flashcards
How can brands be relevant for retailers?
Retailers manage:
- the retailer as corporate brand
- the retailer’s store brands
- the retailer offers national brand
- the retailer offers private brand
What is the structure of brands in the retail sector?
Corporate brand > store brands > private labels > national brands
Why do brands need retailers?
- Distribution
- Selling power
- Promotion
- Growth
- Shopper knowledge
Why do retailers need brands?
- Image
- Choice
- Innovation
- Growth
- Consumer knowledge
What are private labels?
= brands that are owned and sold by the retailer, distributed by this specific retailer and thus only available at the stores/chains of this retailer.
» started as cheap alternatives, but nog available in different price-quality tiers
» in middle and high Q: often by retailer’s store brand name, cheap levels get a more different name.
Where do we see private labels?
Lots in Central and South Europe
Less in Eastern Europe
General decline over time
How do grocery shopping criteria change?
High incomes look more to prices
High incomes look less to quality
High and low incomes lowered their focus on healthy products for a little bit
Explain how private labels gain particulary during economic transactions
- PL share increases when economy suffers and shrinks when economu flourishes
- Switch to private labels is stronger and faster than the switch back to national brands
- Some consumers keep buying private labels after recessions are over
- To lower the effects: intensive marketing expenses are needed for national brands
- However, most national brands cut advertising during recessions, while retailers increase it for their private labels
How does the brand relationship spectrum looks like when it comes to private labels?
> Explicit link: store brand to mark the private label
Sub-brands/endorsed brands: use of a modification of the store brand to mark the private label
No link: no visible association between the store brand and the private label
Why do retailers offer private label products?
NON MONETARY
- To differentiate from other retailers
- To benefit from positive image spillover effects (from private label to store brand)
- To optimize the retailer’s assortment
» To increase store brand loyalty
MONETARY
- To increase negotiation power against national brand manufacturers (higher retail margins on national brands)
- To increase margins
What is the relation between private label share and store brand loyalty?
From private label share to store loyalty
Main influencing moderators:
* Customer characteristic: price oriented behavior (+)
* Product category characteristic: degree of commodization (-) en product category involvement (+)
* Retailer characteristic: price positioning (-)
Important mechanisms:
- Attitute toward the private label
- Switching costs to buy products at another store
Are private label buyers more profitable for the shop?
Gross margin (percent of sales for the shop) is higher for heavy PL shoppers (logic)
» BUT dollar sales for heavy PL shoppers are lower than for light PL shoppers
Why? Heavy PL shopping reduces the dollar value of the basket + very heavy PL shoppers cherry-pick at multiple retailers
» Conclusion: medium PL shoppers are the most profitable
Who produces private labels?
- Dual manufacturers: large companies that produce own brands + private label products
- Dedicated private label manufacturers: small and medium sized companies that focus exclusively on producing private labels
- Major retailers/wholesailers: run manufacturing plants and produce private label products for their own stores
How do consumers perceive private labels?
PAST
- Large price gap with national brands
- Lower quality
- Poor packaging
- No direct advertising support
TODAY
- Private labels often remain the low price alternatives, but also intro of different price quality tiers
- Increasing quality level
- WTP for national brands decreases
- Attractive packaging
- Increasing advertising support
What are the different types of private labels?
- Generic PLs = cheapest, undifferentiated > provide customers with a low price option, expand customer base
- Copycat PLs = me-too at a cheaper price > increase the negotiation power agaianst manufacturers, increase the retailer share of category profits
- Premium PLs = value added > differentiate store, increase category sales, enhance margins
