Private Label Strategy: How to Meet the Store Brand Challenge [Hardcover]

Nirmalya Kumar (Author), Jan-benedict E. m. Steenkamp (Author)

Book Description

Publication Date: February 13, 2007 | ISBN-10: 1422101673 | ISBN-13: 978-1422101674 | Edition: 1

As retailers have become more powerful and global, they have increasingly focused on their own brands at the expense of manufacturer brands. Rather than simply selling on price, retailers have transformed private labels into brands. Consequently, manufacturers such as Johnson & Johnson, Nestle, and Procter & Gamble now compete with their largest customers: major retail chains like Carrefour, CVS, Tesco, and Wal-Mart. The growth in private labels has huge implications for managers on both sides. Yet, brand manufacturers still cling to their outdated assumptions about private labels. In "Private Labels: Competing With and Against Store Brands", Nirmalya Kumar and Jan-Benedict E.M. Steenkamp describe the new strategies for private labels that retailers are using, and challenge brand manufacturers to develop an effective response. Most important, they lay out actionable strategies for competing against - or collaborating with - private label purveyors. Packed with detailed international case studies, valuable visuals, and hands-on tools, "Private Labels" enables managers to navigate profitably in this radically altered landscape.

Editorial Reviews

Review

"...a must-read for specialty retailers of any size." -- The Gourmet Retailer, January 1, 2007

"...essential reading for any manufacturer, retailer, or policy maker interested in the implications of the rise of private labels." -- Laura Tyson, Professor of Business Administration and Economics, UC Berkeley; former Dean, London Business School and Hass School of Business; former Chair, Council of Economic Advisers for President Clinton

"A well-researched and timely study of the challenges that private labels pose for brands." -- Vindi Banga, President Foods, Unilever

"Kumar and Steenkamp have written a most analytical and insightful treatment of private labels..." -- Philip Kotler, S. C. Johnson & Son Distinguished Professor of International Marketing, Kellogg School of Management

"Private Label Strategy offers interesting insight and an illuminating perspective on the role of and opportunities for brand manufacturers." -- Peter Brabeck-Letmathe, Chairman and CEO, Nestlé S.A.

Like the marketing experts they are, the authors have set out to fill a gap on the business bookshelves. -- The Financial Times, March 14, 2007

From the Back Cover

Move over Chips Ahoy; there’s a new President’s Choice in town. The old days of packaging generic brands in plain white wrapper and black lettering are long gone. As retailers have grabbed power around the globe, they’ve transformed private labels from price purchases into powerful brands with their own cachet. As a result, once-powerful brand manufacturers like Nestle and Proctor & Gamble now find themselves competing for shelf space with their biggest customers, like Tesco and Wal Mart.

With retailers and private labels continuing to gobble up valuable market share, you might think that brand manufacturers are already implementing competitive strategies. But instead they are still creating strategies based on outdated myths and assumptions about private labels. A different approach is now essential if brand manufacturing wants to stay in the game.

In Private Label Strategy authors Nirmalya Kumar and Jan-Benedict E.M. Steenkamp debunk the long-standing myths about private labels, describe the new multilayered strategies that retailers are using for private labels, and change brand manufacturers to develop and effective response. But these esteemed authors don’t just tell a story and offer a challenge. They help you meet this challenge head on!

Based on international case studies and an unprecedented survey of customer insights, Private Label Strategy offers actionable strategies that you can develop today. The authors provide the tools you’ll need to compete against—or collaborate with—private label purveyors, and explain why you must consider private labels when telling your brand’s story.

Private Label Strategy is the first book to deal with a radically altered landscape where brand manufacturers compete directly with their retail customers. Some people say, “Brands are dead.” Now is the time to prove them wrong.

See all Editorial Reviews

Product Details

• Hardcover: 270 pages
• Publisher: Harvard Business Review Press; 1 edition (February 13, 2007)
• Language: English
• ISBN-10: 1422101673
• ISBN-13: 978-1422101674
• Product Dimensions: 9.2 x 6.4 x 1.1 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (12 customer reviews)
• Amazon Best Sellers Rank: #167,607 in Books (See Top 100 in Books)
  • #50 in Books > Business & Investing > Marketing & Sales > Marketing > Product Management

More About the Author

Professor Nirmalya Kumar is one of the world's leading thinkers on strategy and marketing, who has taught at Harvard Business School, IMD (Switzerland), London Business School and Northwestern University (Kellogg School of Management).

As an author, Nirmalya has written five books, four of which have been published by Harvard Business Press: Marketing as Strategy (2004), Private Label Strategy (2007), Value Merchants (2007), and India's Global Powerhouses (2009).

Dr. Kumar is an outlier among marketing professors, having accomplished the rare feat of publishing six articles each in both the Journal of Marketing Research (the premier journal for marketing academics) and the Harvard Business Review (the premier journal for business practice). These, and other articles, have attracted 5,000 and 2,000 citations on Google Scholar and Social Science Citation Index respectively.

As a consultant, coach, and conference speaker, Nirmalya has worked with more than 50 Fortune 500 companies in 60 different countries. He has served on several boards of directors, including two billion dollar plus companies and companies included in India's stock indices.

Professor Kumar received his B.Com. from Calcutta University (graduating first in a class of 5,251 students), his MBA from the University of Illinois at Chicago (scoring a perfect 5.0 grade point average), and his PhD in marketing from Kellogg Graduate School of Management (winning the Marketing Science Institute's Alden G. Clayton Award for his PhD dissertation).

All of the above has led to more than 400 press appearances, six European case (ECCH) adoption awards, as well as several teaching, research, and lifetime achievement honors. In 2010, Speaking.com voted him amongst the top 5 marketing speakers worldwide; the Economic Times placed him 6th on the list of Global Indian Thought Leaders; whilst the Economist referred to him as a "rising superstar" in their cover story entitled "The New Masters of Management."

In his personal life, Nirmalya is a passionate supporter of the arts. He is the custodian of the largest known private collection of paintings by Jamini Roy (1887-1972; the father of Indian modern art) and Rabindranath Tagore (1861-1941; the first Asian to win a Nobel Prize).

Customer Reviews

Most Helpful Customer Reviews

8 of 10 people found the following review helpful:

5.0 out of 5 stars Made my Saturday morning shopping trip a lot more interesting..., February 17, 2007

By 

Thomas Duff "Duffbert" (Portland, OR United States) - See all my reviews
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This review is from: Private Label Strategy: How to Meet the Store Brand Challenge (Hardcover)

I always thought that store brands were just manufacturer brands that had different labels on them. But Private Label Strategy: How to Meet the Store Brand Challenge by Nirmalya Kumar and Jan-Benedict E. M. Steenkamp opened my eyes to what exactly goes on in the world of private label branding. And it definitely made my Saturday morning shopping trip more interesting today...

Contents: Brands Under Attack from Private Labels
Part 1 - Retailer Strategies Vis-a-Vis Private Labels: Competing on Price with Traditional Private Labels; Competing on Quality with Premium Store Brands; Competing for the Rational Consumer with Value Innovator Own Labels; Encircling Manufacturer Brands with Retailer Brand Portfolios; Creating Successful Private Labels Is About More Than Just Price; Maximizing Retailer Profitability Using Private Labels
Part 2 - Manufacturer Strategies Vis-a-Vis Private Labels: Produce Private Labels for Greater Profits; Partner Effectively to Craft Win-Win Relationships; Innovate Brilliantly to Beat Private Labels; Fight Selectively to Marshal Resources Against Private Labels; Create Winning Value Propositions for Manufacturer Brands; Are Brands Dead?; Retailer Facts
Notes; Index; About the Authors

As I mentioned in the opening, I never have given much thought to store brands except as a cheaper alternative of the same thing the brand name is selling. But the authors point out there's a wide diversity in private label strategies. There's the generic brand... black and white labeling, low quality, cheap pricing. Then there's the copycat brand... Made to look nearly identical to the leading brand, only at a cheaper price. It often even mentions the leading brand as a comparison point. These copycat brands also encompass the store brands you often see throughout major chains. Third on the list are premium store brands. These are private labels with additional qualities (more flavor or ingredients) or features than the brand name. These often sell for the same price or even slightly more than the leading brand due to their higher quality. And finally there's the value innovators... the labels that have redefined the product group with the best price/performance combination. Think Ikea. Obviously there is far more to private labeling that I imagined...

The first part of the book examines private labels from the point of view of the retailer; how they are positioned, the profit margin, and the power they provide over brand manufacturers. The second part of the book focuses on the other side of the equation. That would be what manufacturers can do to effectively compete against this situation. The option to farm out excess capacity to make these lower-quality knock-offs is tempting, but can lead to lower profits and dependency on that income. Often the best option is to partner with retailers to create a lower-priced branded option, or to innovate at a rate that prevents private labels from keeping up and copying the design. It's a fascinating game of cat and mouse, and one that has a significant amount of money at stake.

When we went shopping this morning, I paid a lot more attention to store brands, product placement, and how the shelves were laid out. I also spent more time analyzing prices between name and store brands, understanding how these forces work against each other. Although the book is really targeted at manufacturers, the informed consumer will also learn quite a bit by reading it. This was definitely an enjoyable and eye-opening read...

3 of 4 people found the following review helpful:

5.0 out of 5 stars Private Label Strategy, February 22, 2007

By 

Wanwisa Clawutinun (Bangkok, Thailand) - See all my reviews
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This review is from: Private Label Strategy: How to Meet the Store Brand Challenge (Hardcover)

I really look forward to see Private Label Strategy because I work in retail business & just launched Private label paints & tools in October 2006. I want to know what is the right strategy I should go ,how to manage manufacturing brands , & how to deal with manufacturing company. Private Label Strategy answers all of my question.
Part one Retailer Strategies makes me not only thinking about dumping price to compete with manufacturing brands but also quality .Page 58 is very helpful how to success with premium store brands.Retail brand portfolios is a must I should do. Page 107 give me the summary of successful retailer private label strategies.At the bottom line, everybody wants profit. Chapter 7 maximizing retailer profitability using private label make me not mislead by looking only at gross margin . I have to do profitability analysis otherwise I will go bankrupt.
Part two Manufacturer strategies . Like chinese old words said " knowing oneself & knowing the opponent. This part makes me know what manufacturing companies thinking, what strategies & how to make use of those companies.
I would say that Private Label Strategy is the book you can't miss indeed.

2 of 3 people found the following review helpful:

4.0 out of 5 stars Private Label Strategy, February 12, 2007

By 

C. Parker - See all my reviews
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This review is from: Private Label Strategy: How to Meet the Store Brand Challenge (Hardcover)

The book helps to address and evaluate the options a manufacturer has in competiting against retailer's private label program. By understanding the drivers of the retailers (profit vs. brand building), you are better able to create your own stratgy. This is the first book that I have come across that addresses these key items.