CPGmatters: What Are Top Ten Best Practices for Private Label Promotion?

Discussion
Jun 21, 2010
John Karolefski

By John Karolefski

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

Increasing
store brand sales calls for building innovative marketing strategies. The best
way to do that, says Professor Mark Lang of St. Joseph’s University,
is to borrow a page from the brand manager’s playbook. In other words,
learn how brand management best practices transfer into the promotion of store
brand products.

“A good cycle of promotions will assure that private label will maintain
gains during the recession,” said Mr. Lang recently in a presentation
at the annual Food Marketing Institute (FMI) conference and trade show in Las
Vegas.

He reviewed the basics of promotion including its common elements and
the Top Ten Best Practices. What is the objective of all promotions?  “Obviously,
it’s to increase sales,” he said.

Mr. Lang listed the following
common elements of a promotion:


  • Offer – What are you giving? TPR (temporary price reduction), other?
  • Message – What are you saying?
  • Display – Where and how are products presented?
  • Delivery – In-store (controlled by the retailer) or out of store (controlled
    by media)

“All of these elements work together to create a promotion,” he
said.

Here are Prof. Lang’s Top Ten Best Practices:


  1. Get organizational buy in.
  2. Focus on the target customer. (“Who is the subset of the population being
    targeted?” The promotion must be built for that target.)
  3. Don’t promote on price. (“You don’t want to habituate
    on price. It’s a slippery slope.”)
  4. Use the store brand as a feature item.
  5. Partner with national brands. (“You can partner and collaborate on
    retailer-generated promotions.” Examples include Comet cleanser and
    Safeway towels; Nabisco cookies and Target milk.)
  6. Cross promote. (grocery with fresh foods)
  7. Leverage symbolic products.
  8. Promote solutions. (“Multiple executions add up to store loyalty.”)
  9. Branded execution (Use integrated marketing for consistency across packaging, POS,
    etc.)
  10. Mix and match. (combine two or three elements in one promotion)

In response to a question from the audience, Prof. Lang singled out Wegmans,
Publix and Trader Joe’s as retailers doing an outstanding job promoting
store brands.

Sales of store brand products topped $86.4 billion across the
major U.S. retail channels over the past year, according to the latest data
compiled by The Nielsen Company for the Private Label Manufacturers Association.

In
supermarkets alone, where market share in units reached an historic high of
23.7 percent, store brands growth outpaced national brands by a spread of eight
basis points and dollar market share also set a new record at 18 percent. Store
brands accounted for 90 percent of the sales growth in supermarkets, adding
$1.5 billion in incremental sales (+2.9 percent), while national brand sales
were virtually flat for the year at +0.1 percent.

Discussion Questions:  In what areas do you think private brands of supermarkets
most lag behind national brands? Which of the promotional practices mentioned
in the article do you think are most critical?

Please practice The RetailWire Golden Rule when submitting your comments.

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13 Comments on "CPGmatters: What Are Top Ten Best Practices for Private Label Promotion?"


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Justin Time
Guest
10 years 10 months ago

Great A&P invented private label brands 130 years ago.

Today they are among the innovators of everything private label, from gourmet and Italian, Via Roma, through pet food, Preferred Pet, to a full line of organics, Green Way, and soon, a full entry level line, Food Basics and Home basics.

Private label is fun. Go to any store, Aldi, Trader’s Joe’s, A&P, Super Fresh, Target and others, and their private label products are standouts.

Play a game, see how many distinct private label names you can find the next time you go shopping in these stores.

You’ll be amazed by the quality, selection, variety, and labeling.

Paula Rosenblum
Guest
10 years 10 months ago

The “price” retailers pay for selling private brands is the elimination of co-op advertising and the CP vendors’ own brand-awareness advertising.

If the cost for private label promotion delivery is less than aggregate gross margin dollars given to national brands, private label is still a good deal for retailers.

Carol Spieckerman
Guest
10 years 10 months ago
Retailers may not need to be reminded to borrow a page from brand managers’ playbooks…they’ve already borrowed entire chapters! All of the points mentioned are currently being leveraged by private brands (though not necessarily embodied in one power brand example). Where I see private brands lagging national brands is long-term planning. I see no problem promoting a private brand on price alone if that is the long-term vision for the brand; however, singular private brand mega-launches can run into trouble when the weight of the world is placed on them, yet brand proposition is less than straightforward. Walmart’s Great Value comes to mind here though I’m hesitant to criticize what by most accounts has been a tremendously successful revamp. However, as much as Target has been dinged for its food program, you have to give them credit for creating clear private label tiers that offer good, better, best wiggle room (Market Pantry, Archer Farms and Archer Farms Simply Balanced) rather than relying on one mega brand then compromising the integrity of it through price tweaks… Read more »
Gene Hoffman
Guest
Gene Hoffman
10 years 10 months ago

Perhaps the largest area where PL lags behind national brands is its lack of omni-recognition since it is not present in all stores. Thus it is Campbell’s and PG’s Tide and Charmin that are billboarded everywhere versus PL which is billboarded only in each chain’s stores. And those two CPG companies never stop promoting smartly. That is because they understand that she who hesitates is won (by Mr. PL.)

The promotional practices that seem to work the best for PL are those now being employed which are growing PLs SOM, whether they follow the playbook of NBs or not. To wit, one can always merchandise fairly when they have the winning cards, and that seems to be a reflection of the retailer’s hand today.

Max Goldberg
Guest
10 years 10 months ago

Private label works at Trader Joe’s because the products have a quality that meets or exceeds national brands, are priced lower than national brands, are unconditionally guaranteed, and are presented to consumers in a fun, caring manner. Few stores have the core story and personality of Trader Joe’s. It takes more than promotional calendars and tactics to engage consumers.

Dan Desmarais
Guest
Dan Desmarais
10 years 10 months ago

The biggest lag for private label brands in general is lack of innovation. Too many SKUs are simply “me too” products.

Shielding is a technique explicitly noted by the professor. This is using the PL and Branded SKU together in the same ad to offset the PL margin cut during the promotion.

David Biernbaum
Guest
10 years 10 months ago

Store brands (private label) should be promoted as a point of differentiation for your retail chain. If you promote on price alone you are probably doing nothing more than promoting the fact that your private label is not as “cheap” as someone else’s private label. Instead, take the bolder approach to promote quality, the brand itself, and its value. At the same time, try not to over-state or under-state your offer, or the brand itself, in promotion or package design because credibility is critical in marketing your private label program.

Roy White
Guest
Roy White
10 years 10 months ago

At a recent roundtable discussion conducted at a major trade association’s conference, a retailer (whose chain is heavily into and highly expert in) private label, pointed out that, while a store brand is a retailer’s own brand and should be supported, it’s important that a retailer realize that the greater good is increased sales and profit in the category and the store, no matter where the increase comes from, branded items or private label. There should, perhaps, be a best practice #11: Promote private brand and branded items in the context of achieving the greater good for the category in terms of sales AND profit. CPGs are couponing heavily to support their brands, thus providing today’s value-conscious shopper more ways to save. Retailers have a host of options to put together category-specific promotional programs, not pitting private label against brands, but creating integrated promotions to satisfy the needs of cash-strapped customers that will benefit the category as a whole, both its branded and private label components.

Dan Berthiaume
Guest
Dan Berthiaume
10 years 10 months ago

When you get right down to it, supermarkets do best in private label areas where either taste is of no concern (such as paper products) or varies little by brand (such as milk). No matter how well a supermarket promotes a private label soda, for example, the fact remains that private label sodas generally taste like fizzy water with a slight hint of whatever flavor is on the label–they are essentially undrinkable. Supermarkets need to improve taste and quality in these categories or realize sales will never be that strong.

Ed Rosenbaum
Guest
10 years 10 months ago

I cannot think of a grocery retailer better at private label promotions than Wegmans, Trader Joe’s, and Publix. These folks have their act together when it comes to this (among many other practices). They know what their buying pubic wants and sends them a strong message. These grocers let their customers know they work hard and long to provide them the best product at the best price. The messages get to them because past history has proven believability, credibility and honesty. We believe we are visiting our neighbors when we go shopping. The private labels are strong and give no reason not to purchase them.

Robert Straub
Guest
Robert Straub
10 years 10 months ago

Costco has managed not just to do private label beer, wine, and liquor, but to do them well. Cheers!

Devangshu Dutta
Guest
Devangshu Dutta
10 years 10 months ago

In my view, the sophistication of a retailer’s private label depends on 5 elements:
(1) The use of consumer knowledge and insight.
(2) Investment in product design and quality.
(3) Price parity (vs. discount) to national/international brands.
(4) How the label is treated, when it comes to advertising and promotion, when compared to national/international brands.
(5) Whether the supply chain & sourcing function is strategically managed and closely controlled.

Most retailers start off with private label programs that are relatively unsophisticated on these parameters. However, some of the larger retailers that are old hands at the game may have some private labels that are quite sophisticated, while others in their portfolio may be “nascent” on these parameters and appear like “me-too” knock-offs. What may appear to be a lag, may actually just be a flanking strategy.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
10 years 10 months ago

Mr. Lang’s top 10 is on target. In particular I liked #5: Partner with national brands. National brands and retailers can create a win-win by working together and pairing up non competing, complementary national brands with private label brands. His examples were great, but I would also suggest that you promote national brand and private label items that can be displayed together — for example, frozen with frozen. With some of the recent work I have done at retail, I have found this approach to yield much better lifts for both the national brand as well as the private label item.

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