Does digital open doors for private label marketing?

Discussion
Dec 21, 2015

Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.

Private label manufacturers can help grocery retailers boost sales of their store brands by working together on digital marketing programs. This is an opportunity that retailers typically are not taking advantage of.

That’s the message that Colt Reichart of Red Gold gave as part of a panel discussion at the annual trade show of the Private Label Manufacturers Association (PLMA) in Chicago.

"Regardless of what digital program or platform the retailer is activating, the manufacturer can provide real substance," said the director of digital and creative media for the provider of store brand tomato products. "No one knows the product better than the people who made it."

Recipes, photos, stories, videos, product information, claims, studies and consumer feedback that most manufacturers already have could be used for digital programs.

Red Gold promo

Source: Red Gold Facebook page

"This will drastically reduce the amount of time and resources needed by retailers as well as give credibility, quality and accurate content to whatever digital program they implement," Mr. Reichart said.

As an example, a manufacturer could provide product images, copy, recipes, claims and information to support a new ketchup launch. A retailer could then do some consumer testing to generate additional content to provide to their customers.





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"Let’s say they did a taste test and found nine of ten consumers preferred the new healthier ketchup over the leading national brand," he explained. "Now we have enough content to create some digital media. The retailer would then take these assets and post relevant content across their various platforms like Facebook, Instagram, Twitter and e-newsletters, driving them to their website where consumers can see all of this information and be enticed to try [the product] the next time they are shopping. Perhaps they can load a coupon directly to their loyalty card and be reminded when they are shopping the aisle."

Hurdles include private label partners generally working with retail buyers who aren’t involved with digital marketing. With manufacturers already working on the lowest cost possible, funding would have to come from retailers.

"But that doesn’t mean the manufacturer is not interested in helping," Mr. Reichart added.

Are grocers missing an opportunity by not collaborating with their private label suppliers on digital marketing programs? Is online marketing and social media offering greater opportunities for private label marketing overall?

Braintrust
"This is what omnichannel retailing is supposed to be about — the seamless presentation of products and the retailer’s brand simultaneously across all platforms, with an emphasis on leveraging the specific attributes of each platform."
"Both of these offerings produce clear points of differentiation for the retailer and also can be the catalyst for engaging Millennials and other digital-savvy shoppers."
"If the private label (PL) manufacturers can provide content to grocers to enhance the perceived value of their products, I cannot see a downside to doing so."

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12 Comments on "Does digital open doors for private label marketing?"

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Ryan Mathews
BrainTrust

This is what omnichannel retailing is supposed to be about — the seamless presentation of products and the retailer’s brand simultaneously across all platforms, with an emphasis on leveraging the specific attributes of each platform.

Digital marketing allows retailers and private label manufacturers to showcase their wares in a variety of ways which emphasize price but also present innovative ways to merchandise the products.

As to the last question, the answer is clearly yes, provided retailers get better than most of them currently are at understanding and exploiting digital media and social networks.

J. Peter Deeb
BrainTrust

Many grocers are missing effective marketing of their private label brand in general not just in the area of digital marketing. Some retailers still have a disconnect in their internal marketing efforts between their store brands team, their category managers and their advertising departments. Many times effectively growing the category can mean passing on money provided by national and regional brands and emphasizing the store brands.

Unfortunately in this era of lowest net cost to the retailer, the marketing of the store brands falls to the category manager. If enough margin is not built in to the everyday price then all marketing, including digital and direct, will suffer. The really effective retailers have this marketing equation embedded in their plans and can easily move their marketing efforts from circular to direct mail to in-store to digital, etc., depending on the category and the items.

Mark Heckman
BrainTrust

For retailers with aspirations for building brand equity for private label, having a partner like Red Gold is a terrific advantage. While retailers of all stripes and sizes are starting to take notice of digital communication strategies, having a supplier who can offer a huge amount of content and perspective on the private label products they produce for the retailer will expedite the learning curve on digital initiatives and more importantly provide a much needed stream of content.

Further, paring store brands and local suppliers (on both the perishable and shelf-stable side of the business) is another powerful combination for a digital initiative. Both of these offerings produce clear points of differentiation for the retailer and also can be the catalyst for engaging Millennials and other digital-savvy shoppers.

Adrian Weidmann
BrainTrust

Trying to balance the marketing initiatives between private labels and name brands is delicate at best. Many name brands know that most retailers are using their marketing and merchandising funds to promote their own private labels. That is why name brands want accountability from the retailers to ensure that their funds are only being used to promote and merchandise their products. The lack of accountability is another reason brands would like nothing better than to communicate directly with their target customers. This ongoing animosity has fueled the development of online brand-direct shopping and purchasing.

Kim Garretson
Guest
Kim Garretson
1 year 11 months ago

I agree with all here, but want to point out a challenge to “Recipes, photos, stories, videos, product information, claims, studies and consumer feedback that most manufacturers already have could be used for digital programs.” Obviously there is a high cost with labor to the brand, agency and retailer to create multiple variations of all this content for all these channels. But I am particularly interested in new technologies maturing from three companies that use AI to “write” different variations of copy from the same base data. For instance, if the product has several hundred reviews, ranked from one star to five stars, this technology can “read” all the reviews and in seconds create stories such as: “The Top Ten Reasons Consumers Love This Product” or “The Five Reasons Why This Product May Not Be Ideal for Your Use.”

John Karolefski
BrainTrust

The digital marketing director for Price Chopper was also part of the panel discussion with Red Gold at the PLMA trade show. She outlined the retailer’s first-rate program that demonstrates how digital can boost private label brands.

Ralph Jacobson
BrainTrust

The opportunities for private label are limitless in digital marketing. Collaboration only increases this opportunity by allowing the messaging to reach additional audiences of both the retailer and the PL supplier. Margins for PL typically, but not always allow some promotional wiggle room, so I would definitely maximize exposure of the brands to drive customer knowledge and passion.

gordon arnold
Guest

With the current business pressures creating a need to focus on getting the consumer in stores or online, the advertising messages are becoming shorter and singularly focused from the retailer. At the same time we are seeing messages from private labels with lists of where to buy running as much as 25% of the add. It is also quite noticeable that medium and small businesses are totally omitted from these advertisements.

This present day condition is polarizing the perspectives and perceptions of vendors and stores to levels of outright animosity when creativity is the need and solution for all to capitalize on. The private brand manufacturer/owners need to brainstorm a means to provide interest and sales to business and consumers if the intent is sustained growth through new market presence and increased product(s) market share via retailers. Creating public interest and demand with present day relevant information and sales methods always was and remains the key to success.

Geoffrey Ingall
Guest
1 year 11 months ago

You must be joking! What’s in it for the retailer? Why go to all that cost and effort to switch consumers from Brand A to Brand B? That’s the marketers job, Mr Reichart.

Doug Garnett
BrainTrust

Where I agree with this is that the partners can significantly reduce the incredible load required by digital marketing. And that’s very good.

Fortunately, this article stops short of what we find in too many digital articles: promises of dramatic impact from all that work.

Digital remains a tricky endeavor — where we must seriously consider whether the intense activity required to execute digitally leads us to wrongly exaggerate what we achieve through that activity. (Apologies, Bill Walton.)

Mark Price
BrainTrust

If the private label (PL) manufacturers can provide content to grocers to enhance the perceived value of their products, I cannot see a downside to doing so. The only conflict occurs when the PL manufacturer is also a branded supplier to that retailer, which is frequently the case. The conflict of interest in that case would be substantial.

Social media marketing for grocers is not a huge opportunity for incremental value, with the exception of customer service which represents a critical element. Online marketing, such as support for home delivery programs, would be helpful, but not nearly as much as PL support of in-store programs such as signage, shelf content, etc.

Naomi K. Shapiro
Guest
Naomi K. Shapiro
1 year 11 months ago

I was just preparing an article, “Why Retailers Should Put Their Stock in Private Label,” when this question came out today on the BrainTrust. There are many reasons private label products are profitable, including the fact that it’s harder for competition to match products and prices. And private label isn’t just for groceries, but to every other retail category, from automotive to high fashion.

In their September 2015, 2015-2016 Private Label Sourcing Survey, Deloitte wrote “…private label accounts for more than one in every $6 of spend in the United States… a significant opportunity for retailers to drive margin, differentiate products, and serve consumers’ wide and changing tastes.”

When it comes to grocers collaborating with their private label suppliers on digital marketing programs, the variety and number of private label relationships may be overwhelming, let alone the logistics of working with manufacturers (many of whom are the same as the brand name products), could be logistically prohibitive.

But to suggest that retailers would have to support private label promotion out of their own pocket, seems counter-intuitive to the idea of private label to begin with.

wpDiscuz
Braintrust
"This is what omnichannel retailing is supposed to be about — the seamless presentation of products and the retailer’s brand simultaneously across all platforms, with an emphasis on leveraging the specific attributes of each platform."
"Both of these offerings produce clear points of differentiation for the retailer and also can be the catalyst for engaging Millennials and other digital-savvy shoppers."
"If the private label (PL) manufacturers can provide content to grocers to enhance the perceived value of their products, I cannot see a downside to doing so."

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