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By,

Kedar Arun Sathe(9221)

Krishna Sumanth(9004)

Gunish Singh (9216)

Manasa(9006)

Bharath Bhushan(9107)

Krishna V (9005)
£



INTRODUCTION: ...................................................................................................................................... 3
BRANDED LABELS: ................................................................................................................................... 4
Benefits of Branding ............................................................................................................................ 5
PRIVATE LABELS: ...................................................................................................................................... 7
TYPES OF PRIVATE LABEL ..................................................................................................................... 9
DIFFERENCE BETWEEN BRANDED LABEL VERSUS PRIVATE LABEL ........................................................... 10
ADVANTAGES OF PRIVATE LABEL ....................................................................................................... 11
DISADVANTAGES OF PRIVATE LABEL .................................................................................................. 11
Why do retailers get involved in Private Labels? .................................................................................... 11
Who Will Win The Battle Of The Shelf ? Branded or Private Label Products? .......................................... 14
BRANDED LABEL COUNTER STRATEGIES................................................................................................. 16
CONCLUSION ......................................................................................................................................... 17
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Sometime in the 1970s, things began to change, albeit slowly, as retailers started to develop
national chains. Some retailers, like Ahold, Carrefour, and Metro, even began to expand
internationally, and consolidation of the retail industry from mom-and-pop stores to global
players was well under way. Spurred by these pioneers, retailers of consumer packaged goods
(CPG), such as Aldi, Auchan, Costco, Lidl, Makro, Tesco, and Wal-Mart, plunged eagerly into
global markets over the last two decades of the previous millennium.

The twentieth century was the century of manufacturer brands. Consumers moved from no-name
products of inconsistent quality produced by local factories in the nineteenth century to branded
products from global manufacturers led by coca-cola, Disney, Johnson & Johnson¶s , Levis ,
Procter & Gamble, Nestle and Unilever. The branded message to consumers was one of smart
shopping. Initially consumers bought manufacturer endorsed brands as symbols of quality, trust,
affluence. These brands were consumed as symbols of aspirations, images and lifestyles.

Manufacturer brands reached consumers through distributors and retailers. For most of the
twentieth century, retailers were relatively small, compared with their largest suppliers. This
allowed branded manufacturers to ride a wave of quality products, innovation, and mass
advertising to establish their power over distribution channels. Manufacturers exploited this
power over retailers by becoming branded bulldozers, forcing retailers to accept.

The last 10 years, selling private label products both in a company dominated by branded sales
where private label had low priority but also in a private label dominated company where the
priorities were opposite. Retailers face the same strategic and organizational difficulties when it
comes to a mixed strategy involving both brands and private labels. Traditionally, the image of
private label was cheap and nasty substitute because of its packaging, but now it has changed.
Some of private label were of high quality but less than the manufacturer brand because of
discounting factor.

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A brand is a distinguishing name and/or symbol (such as a logo, trademark, or package design)
intended to identify the goods or services of either one seller or a group of sellers, and to
differentiate those goods or services from those of competitors. Brands are trustworthy,
delivering quality, consistency and innovation at fair price. A product is something that is made
in a factory; a brand is something that is bought by a customer. A product can be copied by a
competitor; a brand is unique. A product can be quickly outdated; a successful brand is timeless.
Branding is about building a unique identity which can be protected and sustained against
competition. We often come across two products which when compared on ingredients are
identical, when compared on the packaging are identical and when tested in consumer blind tests
are considered identical. Still, the consumers are willing to pay considerably more for the version
with the known brand. A product can be ³copied´ but a real brand cannot.

Some people distinguish the psychological aspect, brand associations like thoughts, feelings,
perceptions, images, experiences, beliefs, attitudes, and so on that become linked to the brand, of
a brand from the experiential aspect. The experiential aspect consists of the sum of all points of
contact with the brand and is known as the brand experience. The psychological aspect,
sometimes referred to as the brand image, is a symbolic construct created within the minds of
people and consists of all the information and expectations associated with a product or service.

People engaged in branding seek to develop or align the expectations behind the brand
experience, creating the impression that a brand associated with a product or service has certain
qualities or characteristics that make it special or unique. A careful brand management seeks to
make the product or services relevant to the target audience. Brands should be seen as more than
the difference between the actual cost of a product and its selling price - they represent the sum
of all valuable qualities of a product to the consumer.

For example, Disney has been successful at branding with their particular script font (originally
created for Walt Disney's "signature" logo), which it used in the logo for go.com. Consumers
may look on branding as an important value added aspect of products or services, as it often
serves to denote a certain attractive quality or characteristic.

From the perspective of brand owners, branded products or services also command higher prices.
Where two products resemble each other, but one of the products has no associated branding,
people may often select the more expensive branded product on the basis of the quality of the
brand or the reputation of the brand owner.

Brand awareness refers to customers' ability to recall and recognize the brand under different
conditions and link to the brand name, logo, jingles and so on to certain associations in memory.
It helps the customers to understand to which product or service category the particular brand
belongs to and what products and services are sold under the brand name. It also ensures that
customers know which of their needs are satisfied by the brand through its products.

A global brand is one which is perceived to reflect the same set of values around the world.
Global brands are brands sold to international markets. Examples of global brands include Coca-
Cola, McDonald's, Marlboro, Levi's etc.. These brands are used to sell the same product across
multiple markets, and could be considered successful to the extent that the associated products
are easily recognizable by the diverse set of consumers.

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In addition to taking advantage of the outstanding growth opportunities, the following drives the
increasing interest in taking brands global:

î Economies of scale (production and distribution)

î Lower marketing costs
 î Laying the groundwork for future extensions worldwide
î Maintaining consistent brand imagery
î >uicker identification and integration of innovations (discovered worldwide)
î Preempting international competitors from entering domestic markets or locking you out
of other geographic markets
î Increasing international media reach (especially with the explosion of the Internet) is an
enabler
î Increases in international business and tourism are also enablers

The act of associating a product or service with a brand has become part of pop culture. Most
products have some kind of brand identity, from common table salt to designer jeans. A
brandnomer is a brand name that has colloquially become a generic term for a product or service,
such as Band-Aid or Kleenex, which are often used to describe any kind of adhesive bandage or
any kind of facial tissue respectively.

The color, letter font and style of the Coca-Cola and Diet Coca-Cola logos in English were
copied into matching Hebrew logos to maintain brand identity in Israel.




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The term private label can be defined as products marketed by retailers and other members of the
distribution chain. Private Label is any brand that is owned by the retailer or the distributor and is
sold only in its own outlets. They are also called in-store brands. Strong Private Labels have been
exported by one retailer to another, typically based on an exclusive agreement. Private label
products encompass all merchandise sold under a retailer¶s brand. That brand be the retailer¶s
own name or a name created exclusively by that retailer
From apparel, healthcare products and furnishings to consumer items, private labels are making
their presence felt in a variety of retail items in the country. In the dogfight world of Indian retail,
the private label is emerging as a new business model. Most retail chains in the country are
increasingly relying on private labels to bridge the gap in their product mix and are targeting
specific needs of consumers. Though, private labels at present constitute about 5% of the
organized retail business, experts feel they can grow up to 30% once retail brands develop in the
country.

Retailers like Pantaloons, Shopper¶s Stop, More, Reliance and Vishal Megamart are expanding
their range of private label products from cosmetics and food to clothing to improve the profit
margins of their stores. Retailers have realized that by having top quality private labels they can
differentiate themselves from other stores and become destination stores. Private labels also give
retailers a chance to bring in unique products in their supply chains that have not been branded
before and it¶s a win-win situation even for the producers who get a chance to display their
produce.


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m Jade Blue
m Mochi Ka Juta
m Food Bazaar
m Pantaloon
m Westside
m Naturals
 m Reliance fresh
m Patidar
m Shree ji
m Induben-Khakhrawala

  

P¶S Of Private label


1. Product: quality is equal to national brand.
2. Partnership: work in extra mile in terms of support, marketing, merchandising.
3. Plano-gram: 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: as per requirement
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

It is difficult to describe Private Labels as oneconcept, as there are many types of Private Labels.
c PES OF PRIVAcE LABEL

1. Store brands - The retailer's name is very evident on the packaging.

2. Store sub-brands - Products where the retailer's name is low-key on the packaging.
3. Umbrella branding - A generic brand, independent from the name of the retailer.

Private labels generate between 75 per cent and 80 per cent of their revenues. Some of these
brands have taken a natural level of growth in certain areas and plans for exclusive stores for
them are being formulated. Unisex brands such as Bare (denim and leisurewear), Ajile
(sportswear) and Rig (utility weekend wear) have also been registering significant volumes to
serve as individual store brands. At present, Pantaloon sports nearly 20 private label brands and
it is the ladies' ethnic wear segment which is pegged to grow in excess of 50 per cent. Its private
label in ethnic ladies wears ² Akkrruti ² has already tied up with designers such
as Rocky S.




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A supplier of branded products is focused on maintaining and building own brands. This is
secured through long term, innovative, widely distributed and advertised products to build
uniqueness and preference in the consumers¶ minds. This justifies a premium price. However,
this is not at all the case for a Private Label supplier where it is the retailer/distributor that, as
owner of the label, tries to persuade its consumers through its own marketing organization to
choose for the Private Label. The approach of individual products is often dependant on the
overall Private Label platform as brands are stretched and applied across product categories.
Also, as the ownership belongs to the retailer and hence the risk in case of any failure and/or
consumer complaint, the retailer will typically involve a team of quality assurance people and
technical managers in the development process. In this way, the suppliers account manager is
³only´ indirectly involved in the brand building but on top of good sales and marketing skills,
he needs to manage/facilitate a broad network of expert functions.


ADVANcAGES OF PRIVAcE LABEL

1. Lower Prices
2. Better Margins
3. Offer consumer greater value
4. Bargaining power to the retailer

DISADVANcAGES OF PRIVAcE LABEL

1. Conflict with other brands in the category.
2. Higher R&D expense
3. Higher marketing expense
4. If product fails, will create negative image
5. Inventory risk

  
 

 
 
 

Retail consolidation has had a strong influence on Private Label. Store brands have become a
way for retailers to differentiate themselves from their competitors and to create loyalty to their
stores in an evermore tightly concentrated marketplace. From the retailer perspective, there are
clear advantages in developing its own Private Labels. The most import reasons are:

î 



 



 
 


Retailers on a percentage level can improve margins by introducing Private Labels, but this must
be combined with the effect on volumes in case brands are replaced with Private Labels. Some
Private Labels do just not have the traffic building power of brand name goods the appropriate
measure is dollar profit per square foot.
Optimization should be done in value (not percentages) with respect to the critical resource of a
company which is shelf space in retail. This means that gross margins must be corrected for
discounts, slotting allowances, listing fees, promotions, advertising and other ³free´ services.
Furthermore, as brands are usually sold at a higher retail price. Thus even when the net margin as
a percentage on brands is lower, the absolute value profit may still be higher than for Private
Label. Lastly, the shelf space turnover (velocity) is often much higher for brands.

î  
    
  
   
  
    

 

  

 
   


Private Labels can be a vehicle in launching price competitive products and hereby attracting the
cost conscious consumers. With similar products, retail prices can be reduced 2030%. Some
mainstream retailers have been forced in this direction by the intensified price pressure from the
discount sector.
There is a general assumption that Private Labels are for lowincome households or those that
need to economize by buying bigger sizes. This notion is no longer true. A look at household
data indicates that a greater proportion of lowerincome households do indeed purchase PLs, but
higherincome households are not far behind. The market share of Private Labels across revenue
levels indicates that they possess a near equal share of purchases for lowerincome households
and higher income households. As the CEO of the Belgium retailer Colruyt noted ³Poor people
may need cheap prices, but rich people love them´.

î O




   


On the third point, products bearing these Private Labels brands offer another way for retailers to
increase customer loyalty and build a certain retailer profile. Empirical evidence supports the
strong relationship between purchasing of Private Labels and store loyalty. The retailers own the
labels and hereby the consumers¶ loyalty. Adding Private Labels to the range enables the retailer
to differentiate itself from its competitors. Rather than manufacturer¶s brands, Private Label has
become a strategic weapon with which retailers compete for sales, market share and loyalty. This
can be achieved through attractive packaging, with highquality products and exclusive products,
but also by offering products that are not available anywhere else. In most cases, the retailer uses
the name of the store as its Private Label name. In this case, the product, as long as it is used in
the domestic household and the packaging remains visible, will continue to promote the store.
From a retailer s perspective, brands are commodities, available at many competing retail chains.
By introducing store brands, the retailer differentiates itself from other chains. This increases the
psychological costs for its customers to switch retailers since they will not be able to purchase
their favorite store brands at competing retailers.

î  
 
 
 
    
 
 
    

   
 
  
 
 

  

The fourth point has two sides. First of all, developing an alternative to the brands gives an
obvious advantage in the negotiation with the branded suppliers. Even the most valuable brands
in the World are not immune to this pressure. A former high level marketing executive of Coca
Cola conceded that Coca Cola significantly lowered the wholesale price of its products in
response to the introduction and aggressive shelf placement of a premium store brand by a large
supermarket chain. The implication is that the retailer in regular, tough negotiations lay down the
new conditions for the supply of a specific product. To be assured of the most favorable
conditions, the potential suppliers are played off against one another in an uncompromising way.
The result of this is that the retailer can make an estimate of the actual cost price of the product.
In other words, obtains a rough idea of the profit margin and the markup that the branded
manufacturer charges for its innovation and marketing effort. The retailer will use this
knowledge in his negotiations with the brand suppliers in order to realise better buying
conditions.

î   
 

 
 
   
    

In general, branded suppliers will offer products that are aimed at the mass market. A retailer on
the other hand, can develop products that are targeted to specific consumers who visit its store
formula. By means of such niche marketing strategy, very specific target groups can be
approached with Private Labels. With a Private Label portfolio, subsegmented through quality
and packaging design, the manufacturer¶s brands can be rationalized. This has resulted in the
disappearance of many branded items, often secondary and tertiary brands.

î
 

The last point is rather special, but successful Private Labels can also be sold outside the
retailer s own stores. For example, Delhaize carries a large selection of pasta from the PL of
Italian retailer Esselunga. ³Swiss Delice , a premium brand for the Swiss fine food specialities
produced by Swiss retailer Migros is not only carried as PL by Migros but can also be found at
Sainsbury s and Delhaize.

Hence, there are good reasons for introducing Private Labels, but in general brands are still
desired. There are brands so strong that leaving them out of the assortment will mean loss of
consumers. But these players have one major problem related to the continuous development of
the assortment. Predominantly the area is dominated by ³copycat products which are developed
as followers to the branded items. The consumer engines are on the branded side. On one side
this means that Private Label do not face the risks associated with new product introductions,
because they only introduce such copycat brands once the manufacturer¶s new product has
become a hit but on the other side they also loose valuable time and money as new trends can be
overlooked or at least first noticed when over. Also, the Private Labels focused players will often
have limited access to R&D facilities as opposed to the brand focused players.

 



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Modern trade grew four fold over the past six years, achieving an 18 percent increase both in
store count and turnover compared to 2007. With increasing retailer concentration, one key focus
for manufacturers will be the associated bargaining power of channel retailers. Retailers
introduce private labels in a category not only to gain profits directly from the private label but
also to provide greater choice at a different price range for consumers to purchase from.

In developed markets, private labels occupy a noticeable level of market share. The importance
of private labels continues to accelerate with a steady global growth of 13 percent in 2008, which
has been driven by consumers looking to economize on their expenditure.

Overall, Non-edible products enjoy a higher market share and purchase frequency by consumers
than Edibles. Categories topping the list with private labels include Plastic bags/wraps,
Household gloves, Household cleaning aids, Wet tissue & baby wipes among others. Private
labels account for 3-13 percent value share in these categories. Edible categories are focused on
Edible oil, Pie and Packaged rice, where private labels are taking 2-3 percent value share.
Different geographic areas also have different acceptance to private label. Shoppers in the North
and East tend to purchase private labels more regularly than those in the South.
Most consumer goods categories are already occupied by a number of low-price brands, where
quality will be the critical winning factor on top of µlow-priced¶. Obviously there is a need for
private label to improve on perceived quality and safety before it can take a larger percentage of
the market.

The private label segment is expected to grow, driven by the ongoing, incredible growth of the
modern trade and the continued emergence of major regional or national retail chains. Current
bad economic times also provide a good financial impetus to private labels. There has been a
fundamental shift in consumer spending patterns, as restraint becomes the new mantra. Wal-Mart
announced their plan to grow the sales importance of its private label brands from 2.5 percent to
20 percent in five years.



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Brand manufacturers should build strength continuously to compete with private labels before
they take off:

1. Develop unique products and stay ahead as a trend leader
2. Create own stores
3. Develop a compelling marketing strategy
4. Increase brand loyalty
5. Combine effort by offering exclusive lines. i.e, Simply Vera, American Living, Liz & Co
6. Create one shot exclusive deliveries and SKUS
7. Evaluate sourcing strategy and production cost
8. Maintain net price (minimal promotions & discounts)
9. Improve forecasting and turn around time
10.True innovations with clear points of differentiation and competitive advantage will be in
a prime position to win.
11.A good variety of premium and low tier product portfolios is crucial to satisfy the wide
range of consumers.
12.Assess the market, down to specific retailer level. Understand the role of the category
leader for each retailer and how important private labels are to that mix. Drive top quality
analytics, an area where retailers are growing in sophistication.
13.Work with retailers to establish a business model that sustains profit margins for the
channel.
14.Support retailers¶ penetration to lower tier markets and lead the strongest elements of
µfirst moment of truth¶ in new stores.


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Retailers in India are spurring consumers' decision-making by expanding the scope of private
labels. For most consumers, a private label is just another brand, hence, there has been a steady
growth especially in the categories where consumers have less loyalty to better-known or
promoted brands are the categories where in store brands are picking up.
Private label brands have come far enough in the minds of consumers for these brands to
compete as legitimate brands in their own right. From the consumer perspective, private labels
have closed the gap with national brands. Consumers believe private labels are ³identical´ to
national name brands and almost 50% see them as ³close´ but not yet on par with name brands.
Private labels matter for higher gross margins to retailers and also help in differentiating them
against other retail outlets. Hence retailers are adopting different marketing strategies to
maximize sales and are giving a direct competition to established manufacturing brands. It could
be concluded that Private labels are here to stay, and will be dominate 50% of the retail market.