Private Label is as strong as ever. Here in Switzerland for example PL represents 60% of the total market and that means an ever increasing pressure for shelf-space. Brand leaders should remain safe, but secondary brands need to react if they don’t want to be delisted.
No question about it, INNOVATION is still the best way to fight back, even if it only gives you a small head-start. However, if your innovation pipeline looks like the sahara dessert (dry), there are other initiatives brands can undertake to counteract PL pressure. Here they are:
- Driving new values: PL usually needs to stick to the old value-for-money and hard selling communication. Brands on the contrary can advocate for new values (ecology, reduce water consumption, sustainability, fair-trade, etc).
- Heritage & nostalgia: Brands have been there for a long time. Recovering some of the brand nostalgia can be a good way to strengthen the emotional bond with consumers.
- Direct to consumer: Who hasn’t heard from Nespresso? The trend for producers to sell directly to the consumer are increasing. The internet, factory outlets etc are good examples.
- Co-branding: If you can’t beat your enemy, join him! Why not produce a product for your retailer? Idea is to use your brand as a reassurance for quality and communicate the retailer brand for a value-for-money proposition. It worked for Starbucks and Costco.
- Exclusive promotional formats: Develop exclusive promotional formats for specific retailers. Format should be in-line with the retailer’s shopper profile (especially discounters).
- Value lines: Cheaper branded alternatives aimed at narrowing price gap between PL and manufacturer brands. P&G launched Ariel Básico and Pampers Simply Dry.
- Brand loyalty programme: In Nestle Switzerland for example there is a program called MONDO. Consumers can collect points from trhe different brands and exchange them for presents! Another typical example is the music codes given by many soda brands!.
Posted by Ignacio Molins
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