New Stretegic Brand Management - Chapter 5

Produced by Kevin Almeida

CHAPTER 5:

MANAGING

RETAIL BRANDS


ContentEvolution of the Distributor’s BrandWhy sell Distributor’s Brand?Should manufacturers produce goods for DOBs?The financial equation of the distributor’s brandThe three stages of the distributor’s brandFactors in the success of distributor’s brandLaunching a ‘Store Brand’: Eight StepsOptimizing the ‘Store Brand’ Marketing MixHow trade brands become real brands


Evolution of the distributor’s brand The notion of ‘private label’ categorizes the distributor’s brand as a thing apart, and

not using the word ‘brand’ therefore fails to account for the true reach of distributors’ brands.

Distributors now manage their brand portfolios as part of an overall vision for the category and for the store.

They have to choose their ‘brand mix’ for each category segment, and make a decision with regard to the type of brand to offer.

In terms of nominal relationship to the store, a distributor’s brand may either carry the name of the store or its own name: one or the other. Eg: Store endorses its own products: All Marks and Spencer products are called St. Micheal.

Denoting the forms of distributor brands; The OWN Brand or PRIVATE LABEL – has its own name and doesn’t refer to the company

name. The COUNTER Brand The POSITIONING Brand – offering the best quality / price ratio, position themselves on

trends or in the premium segment.


How retail brands innovate The function of the national brand, the big brand, is to

supply progress through innovation, change, fashion, design and so on.

Can the distributor’s brand also innovate? Its business model assumes light marketing – in order to reduce the costs linked to the dozens of product managers.

A common riposte is that distributor’s brands were the first to introduce innovation in terms of packaging.

Eg; turning shampoo bottles upside down.


Consumer relationships with distributor brands

Distributor brands are perceived as genuine brands, with their attributes of awareness and image always combines with an attractive price.

The consumer’s proximity to the brand moves from feeling of presence (awareness, recognition) to a feeling of relevance (it’s for me) to the perception of performance and a clear advantage, and ultimately to a genuine affective attachment.

Engagement – personal involvement with the brand – measures a strong relationship with the brand, meaning if the brand were not there, the client would prefer to wait than buy an alternative.

Engagement comes in two sources – 1. Strong perception of the proximity

2. Satisfaction linked to a perception of difference in product performance.


Why sell distributor’s brandsIn the mass consumption sector, the early

distributor’s brands are almost always born of a conflict between the distributor and the producer.

Consumers are selective. They decide in which categories they are the most tempted to buy distributors’ brands: those in which they have a low degree of involvement. (Kapferer and Laurent, 1995).

Brands exists wherever customers perceive a higher risk in purchasing.


Cont….

The distributor’s brand makes it possible for large stores to present themselves as objective allies of local and regional SMEs against the multinationals.

Mass distribution does not always have a good image.

The crushing of small businesses has contributed in large measure to the desertion of town centers.


Manufactures producing goods for DOBs

The following arguments advances in producing DOB goods;It relieves the burden of fixed costs. Allows them to benefit from economies of scale. May be intrinsically profitable, since there is no need

for marketing, communication or sales force. If no execution, their competitors will.


The financial equation of the distributor’s brand

The principle of ROI, in understanding why the distributor’s brand is an advisable step;

Net Margin = Gross Margin – CostsStock Rotation = Sales per square meter /

Investment per square meterROI = Net Margin * Stock Rotation

This has been the key differentiator component from the outset for the following brands;


The three stages of the distributors’ brand

First Stage: is known as reactive or oblative;This is how, many own products are born. A category

management approach quickly identifies those segments where something should be offered to the client.

Second Stage: is imitative;Distributor examines its competitors’ distributors’ brand

ranges, and sets about imitating them, producing the same products typically supplied by its other competition.

Third Stage: is the identity stage;The distributor’s brand is used to capture market share

from the competition. It becomes a genuine instrument of strategic differentiation, expressing the identity, values and positioning of the store itself.


Factors in the success of distributor brands

The rise of a new brand is also the result of the actions taken by the competition. Factors for distributor brand’s market share;

The size of the potential market: the distributor opts for long production runs The high margin in the sector The low advertising expenditure The ability to achieve quality Consumer’s price sensitivity.

(Hoch and Banerji) 1993 It is known that a factor does affect the penetration of distributors’ brands is the

rate of innovation in a sector. The success of distributor brands is linked to a supply effect but also by a lack of

competitiveness from high-profile brands, which are too used to high margins, and do not innovate.

This penetration depends on the specific range of category. Consumer degree of involvement (Enduring sense or as a temporary feeling

at the moment of purchase)


Launching a store brand Retailers have to take sales and margins from their own suppliers,

not only through better trade conditions, but by selling the products under their own store brand. Once the decision is made, eight specific steps should be followed;

1. Specify the reasons why the retailer needs a private label now. 2. What products should be covered? A private label policy certainly

grows in scope through time and experience. 3. How many price lines should be there?4. How many brands should there be?5. How far should retailers go in the specifications?6. Proposals should be really launched. 7. Validate the choice of supplier. 8. Launch inside and outside.


Re-capEvolution of the Distributor’s BrandWhy sell Distributor’s Brand?Should manufacturers produce goods for DOBs?The financial equation of the distributor’s brandThe three stages of the distributor’s brandFactors in the success of distributor’s brandLaunching a ‘Store Brand’: Eight StepsOptimizing the ‘Store Brand’ Marketing MixHow trade brands become real brands


QUESTIONS?


THANK YOU

New Stretegic Brand Management - Chapter 5

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