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retailing-private label

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retailing-private label

  1. 1. RETAILING Private Label
  2. 2. What are Private Labels? • Private Labels are Retailers own, control, and exclusively sell store brands • Private Label are a ‘Good Alternative’ to Other Brands, Offering the Same Quality & Value • Private labels are regarded as good Value for Money, and Quality on Par with the Big Brands.
  3. 3. Journey of Private Labels • The origin of private label can be traced back to the ‘60s and ‘70s where the offering was cheaper, generic products. • In 1970’s they were in the form of black and white labelled products. • The major improvement in packaging was the first step in the success of private label. • Traditionally, private label products have focused on the low- end price point. Now, some retailers will offer private label products across multiple price points including a premium line. • The popularity of private label is creating an additional challenge to name brand producers who need to recover expensive advertising and marketing costs.
  4. 4. Who Makes Private Label Products? • Private label products are made by several types of manufacturers. • Some large brand manufacturers use their excess capacity and expertise to produce private label products. • These products may be sold into food service venues or retail locations.
  5. 5. National Brands vs. Private label • Manufacturer (National) Brands • Designed, produced, and marketed by a vendor and sold by many retailers • Private-Label (Store) Brands • Developed by retailer and only sold in retailer’s outlets
  6. 6. Spectrum of National vs. Private Label The Gap Limited Marks & Spencer IKEA Home Depot % Store Brands National Brands Macy’s Target
  7. 7. Relative Advantages of National Brands versus Private Brands Type of Vendor Impact on Store National Private-Label Brands Brands Store loyalty ? + Store image + + Traffic flow + + Selling and promotional + - expenses Restrictions - + Differential advantages - +
  8. 8. Private Labels Advantages • Unique merchandise not available at competitive outlets • Difficult for customers to compare price with competitors • Higher margins Disadvantages • Need to develop expertise in developing and promoting brand • Typically less desirable for customers
  9. 9. National Brands Advantages • More desired by customers • Don’t need skills and people to develop and promote merchandise Disadvantages • Lower margins • Vulnerable to competitive pressures
  10. 10. Most Recognized Apparel and Accessory Private Label Brands
  11. 11. Examples of Private-Label Brands
  12. 12. Examples of Private-Label Brands
  13. 13. Private Label Options • Bargain Branding • no-frills product at a discount price. • Copycat Branding • imitates the manufacturer brand in appearance and trade dress • Premium Branding • private label at a comparable manufacturer-brand quality. • Parallel Branding • private labels that closely imitate the trade dress and product attributes of leading manufacturer brands.
  14. 14. Consumers perception about Private Labels
  15. 15. Price comparison of a National brand and a Store brand in US
  16. 16. Some Categories More Suitable than Others • Categories preferred for Private Labels • Dog food • Kitchen towels • Sugar • Flour • Paper products • Plastic wraps • Water • Rice and cooking products • Categories less preferred for Private Labels • Shampoo • Baby food • Pasta sauce
  17. 17. Preference of Private Labels • Two thirds of global consumers consider supermarket own, or ‘Private Label’, brands to be a good alternative to other brands • The market shares of store brands vary by product class and across countries • Global average who considers Supermarket Own Brands as a good alternative to other brands – 68% • Europe: 78% • the Pacific: 78% • North America: 77% • South Africa: 72% • Latin Americans: 64% • Asia: 51%
  18. 18. Store brand market share in some other countries 41 29 24 22 20 12 0 5 10 15 20 25 30 35 40 45 Switzerland Canada Spain Store Brand Market Share
  19. 19. Private Labels in Hong Kong Private label brands still have a long way to go in Hong Kong The 17% growth of private label brands in Hong Kong in 2011 is way below Asian peers.
  20. 20. Benefit to Consumers • Good Alternative to name brands • Quality as good as name brands • Good value for money • Good for people on tight budgets who can’t afford the best • The cost savings for the typical consumer is large
  21. 21. Benefit to Retailers • Significantly bigger margin on those sales. • Significant source of additional profitability. • Gives the retailer the flexibility to more easily align a specific customer need with a specific product. • The packaging and labels can be custom tailored to meet customer needs • Allows more control over pricing strategies. • Gives freedom for retailers to create their own marketing plans and to control their own inventory in stock. • Promote stronger customer loyalty toward retailer store.

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