by Rick Rusch
For The Shelby Report
Private label or store brand foods have grown explosively. No news there! Private label food and beverage sales surpassed $98 billion in the United States in 2011, according to Packaged Facts figures from October 2012.
Take a quick look at the facts:
• Between 2006 and 2009, private brand market share rose across 74 percent of products in the personal care, household goods and food and beverage categories in the United States.
• Private labels represent 20 percent of grocery store and 18 percent of supercenter sales.
• Store brand products were 31 percent cheaper across product categories than their national brand counterparts.
There are various advantages for the grocers to go for private label brands. Chief among the advantages are:
• Pricing control
• Personalized image
• Control over production, marketing, distribution and profits
• Satisfying customers’ changing preference for private label products
According to “The 2013 American National Pantry” published by consulting firm Deloitte, consumers’ perceptions and attitudes toward private label brands are changing significantly, dispelling the notion that spending less for private label brands means consumers are settling for less from private label brands. According to the report, only one-third of the respondents felt they were giving up quality when purchasing private label products.
Why is that? Consumers today believe that store brands and national brands are essentially made of the same ingredients. According to Deloitte, 80 percent believe that store brands are manufactured by the national brands. Perception impacts reality.
The report further suggests that the current economic climate has made consumers more discerning about the brands they prefer. A full 75 percent of respondents agreed with the statement, “these economic times have made me more aware of which brands I care about and which ones are less important to me.”
That said, there is little question if grocers should offer private label product to their customers. The real question is will grocers grow private label brand value or simply grow more private labels?
Grocers taking the long view will see private label products as a tactical component of building the value of their brand.
In understanding the role private label plays in building a brand, it is imperative to define exactly what a brand is. A brand is not a logo, a tagline or an advertising campaign; a brand is a multidimensional platform that can be your greatest differentiator and competitive edge, if built correctly. It represents both a rational and emotional connection to your various stakeholders and the consumer that ultimately decides to purchase and engage with you. It’s important to understand and deploy the power of a fully developed brand.
Building a brand is not accomplished in a whiteboard session. Brand building is a concerted effort, and private label products contribute mightily to that effort.
Let’s connect brand-building blocks to private label products…it’s really quite simple:
Brand Block #1—Focus on Quality
Brand value is all about having a product that means something to the consumer. Consumers value products that are of good quality. They will not buy inferior quality goods that break down easily, or do not last as long as they should. Therefore, any company that is looking to create brand value must ensure that they have a product of quality. In addition, quality must be delivered consistently—not erratically but all the time.
The Private Label Solution—Consumers’ perception towards private label is aligned with quality. Offering quality product with your brand associated with it is a prime component of elevating the value of your brand.
Brand Block #2—Clearly Communicate Product Benefits
The truth is, consumers will not be motivated to buy your product if they think that there is no value in doing so. In a real sense, their emotions come into play; if they believe in the product, that motivates them to purchase.
The Private Label Solution—By controlling packaging of private label products, aligning the products’ benefits with your brand proposition can be seamless.
Brand Block #3—Create an Expectation
Boost the perception that there are great benefits to be derived from purchasing your private label product. Evoke the comfort and peace of mind they will experience when they buy your product. They will place value on that expectation.
Private Label Solution—Emotional connection to your brand is the highest achievement…leverage private label products to over-deliver on the emotional benefits of your brand.
Brand Block #4—Create a Brand Experience
Make your private label product enticing as well as consistent, so that they know they are getting superior value when they purchase your product.
Private Label Solution—When you do this, it will arouse interest, generate brand loyalty and increase sales.
Brand Block #5—Reinforce the Brand
Initiate activities that will build a strong image. This will create positive images that will keep customers coming back and also attract new ones.
Private Label Solution—This is all about communication. All elements of your private label product—packaging design, names, images, quality and price—must be cohesive with your larger brand proposition.
Brand Block #6—Don’t Break Your Brand Promise
Be true to your brand. Customers will return to you if you are, and they also will be willing to refer others. So always deliver on what you have promised.
Private Label Solution—It’s your product with your brand name on it. It is a key touchpoint with every consumer. In the words of Winston Churchill, “Never, Never, Never Quit”—in delivering on your brands promise.
The true value of a brand identity lies in the view of the target audience. The best-intentioned branding strategy will fail if you don’t deliver on the promises implied within your brand. Promising service or quality requires delivery of said promise. Branding is an ongoing effort. Your brand will not be established by a major marketing effort, a huge promotion or an advertising blitz. Every customer interaction builds up or tears down a brand. Private label products afford grocers control in the product sold. Perhaps even more importantly, private label products create an exclusive relationship with your customers. Something external brands cannot and do not do.
With all of the associated positives, private label products are a terrific place to focus your brand energy.
Rick Rusch is CEO/partner of Denver-based Thought-Tech LLC. Thought-Tech guides clients in branding, marketing and selling. The firm specializes in strategic and innovative solutions in product development, branding, product-launch and online marketing for its clients. Thought-Tech’s product MobileBrandLinx is a custom Quick Response (QR) code service to extend branding connections to consumers. Rusch can be reached at [email protected] or 303.396.5123.