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Description
When there is very little or no advertising and marketing efforts, how can one build private label brands? This article evaluates the issues behind branding of private labels.
Retailing has evolved itself as a very specialized area, and the boom in retailing is very evident all around us. With the retail boom that is currently on, we are also seeing the emergence of Private Labels as a marketing phenomenon. They are cutting into the sales of many manufacturing company brands, which are otherwise popularly termed as National Brands. In the mature markets of the West, private labels had accounted for nearly 13% of the supermarket sales in the US and nearly 20% of the supermarket sales in Canada during 1990-91. According to published research data (John Stanley Associates), roughly 45% of the products sold in Europe and 25% of products sold in the US are private label goods. These private labels are supposed to bring in up to 18% savings in Europe and up to 25% savings in the US over branded goods.
In India too, private brands have started making their presence felt. During the year 2003, Big Bazaar of Pantaloons group had 25% of its sales coming from in house labels, and it earned 4% higher gross margin on these than other popular brands. For Lifestyle, more known for its apparels, 11% of the business in 2003 came from private labels. The fact that the retail store is more important than the brands you buy, is evident from the statement made by a customer who purchased a Peter England shirt from Pantaloons"I bought this shirt from Pantaloons", with no reference to the brand purchased.
Perceived Decrease in the Quality Variance between Brands:There has been a significant decrease in the variability of quality perception among different brands. Research reports from 1978-90 prove this point.3 The result of this is the fact that consumers started to perceive more products as commodities, distinguished primarily by price. The situation proved ideal for private labels.
