Branding - How To Succeed 6

Brand Management

Types of Private Label: Continued

In the case of private label credit cards, it is the name or logo of the retailer coupled with the inherent style of branding that, combined together, give rise to the appeal and marketability of the card. The provision of credit facilities on such cards is normally provided by a third-party issuer as part of a growing trend whereby retailers prefer to outsource their in-house programmes.

In recent years, there has been a marked upsurge in the emergence, globally, of private label brands. In the case of Europe, private label goods currently represent in the order of 45% of all the products sold in supermarkets. On the other hand, in the USA, this figure is around 25%. In terms of specifics, Wal-Mart is an excellent example in that 40% of the products sold in its stores are marketed under a private label brand. The private label concept has been enthusiastically adopted by many Pacific Rim countries, such as Australia, Singapore, and Japan where its in-store presence is noteworthy.

In the past, there was a popular conception that private label goods were seen as a combination of low-priced, low-quality products. However, in recent years, the public perception in respect of the quality of such goods has improved. Coupled with this has been that fact that companies themselves have begun using the private label to market higher quality goods with the aim of increasing their brand image. Furthermore, recent market research studies have indicated that consumers are exhibiting a greater willingness to purchase private label products resulting from their enhanced image and quality.

The recent growth in the availability of private label products has led to the emergence of grocery chains who specifically sell such products. Two leading examples include:
Trader Joe’s – This is a privately owned chain of grocery stores whose forte is in the sale of speciality goods. It is a US company with over half of its outlets centred in and around California.
Aldi – Which is an abbreviated form of ALbrecht DIscount, is a discounted supermarket chain centred in Germany. It has stores throughout Germany and across many parts of Europe. An interesting piece of market research has shown that the majority of Germans shop at Aldi. The stores strictly “no frills" concept is evident in the fact that it does not decorate the aisles or fill the shelves. Instead, pallets of the products, packed individually in cardboard boxes, are situated alongside the aisles, with customers removing the products until the pallets are eventually emptied.

Private Label Manufacturers

The Association of Private Label Manufacturers, or PLMA, has designated the manufacturers of private label products into four distinct groups:
Large Manufacturers – Large national brand manufacturers who apply their unused plant capacity together with their expertise in order to supply store brands.
Small Manufacturers – Small, quality manufacturers whose speciality is certain product lines and who focus on producing primarily store brands. It is not uncommon for such manufacturers to be part of larger corporations who themselves produce national brands.
Major Retailers – Major retailers and wholesalers with in-house manufacturing facilities who produce store branded products for their own use.
Regional Manufacturers – Regional brand manufacturers who supply private label goods to one or more specified markets.

Branding – How To Succeed