Customer Reviews

Private Label Strategy: How to Meet the Store Brand Challenge

5 star:		(8)
4 star:		(2)
3 star:		(2)
2 star:		(0)
1 star:		(0)

 

 

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...

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.

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.

Worldwide private label sales in 2007 were $1 trillion, and growing. This has been abetted by consolidation within the retail industry - eg. Wal-Mart's $126 billion in private label sales exceeds Nestle's (largest manufacturer) total sales of $75 billion.

Apparel, packaged goods, electronics, financial services, books - all are involved.

Private labels are mostly copycats, and don't face the risks and costs of new product introduction. Even without attaining great success, they provide leverage vs. manufacturers.

Walgreen's averages $677/square foot in sales, with prescription drugs making up 63% of those sales.

Retailer gross margins on private labels vs. manufacturer brands are about 25-30% higher, but may be less profitable due to slower turnover.

About the only takeaway from this book is that private label sales are large and growing, and the major manufacturers' clout and profits suffer accordingly. There really are no good counter-strategies, except to reduce costs and perhaps spiff up packaging, advertising.

This book is a good academic text, mixed with real life consulting examples from the world of big retailers and big CPG companies. But there's little prescription for the scores of companies smaller than, say, P&G, who find themselves far below #1 and #2 category leader positions. Essentially, the retail chains and the market leaders will eat your lunch...

In the old days, black and white stenciled labels clearly marked generic brands. Those days are gone. Today many private-label goods are more sophisticated than their competitors' parallel products. The growing popularity of private brands has changed the branding, retailing and product development marketplace, which was already shifting in response to globalization, faster trend development and advanced consumerism. Nirmalya Kumar and Jan-Benedict E. M. Steenkamp have a solid understanding of these developments. They buttress their explanations with interesting case studies from leading merchants and manufacturers. Retailing is an exciting business, and the authors bring forward the right mix of research and specifics to make a lively case for private labels. getAbstract recommends this to anyone seriously interested in retailing, the changing shape of consumer society and, of course, shopping.

Concise insightfull and well backed with relevant examples to demonstrate the principles outlined. A great run down on the fundamentals governing this topic without over complicating it with academic mush. Congratulations on a great book, gentlemen.

I am an incessant reader of business books and must say this is one of the best I've ever read. The statistics and charts and graphs in this book alone are worth the cost. WalMart's private label brands represent over 40% of Wal-Mart's overall business and they are not alone as a mass chain. As national chains develop critical mass, AG Lafley at P&G recognizes that the power is beginning to shift to the entity which owns the customer- the retailer-- and he's making major changes in P&G's business strategy to continue to compete. The private label business has become extremely competitive and requires significant analysis in how to compete and which categories to compete in- all based on market trends at the moment. The authors have done an incredible job of breaking it all down and providing an actual path to understand how market dynamics affect what type of private labeling strategy should be taken.

Private labels are everything but generic. Very inspiring book from re-known authors, the private label issue just deserved it after so many years growing consistently. For sure a must read for anyone interested in looking for ways to fight private label. Don't expect to find a silver bullet, it has more to do with a combination of set of actions over time.

Marketing professors Nirmalya Kumar and Jan-Benedict E.M. Private Label Strategy: How to Meet the Store Brand Challenge, a tell-it-like-it-is expose of how the old days of packaging generic brands in white wrapping and black lettering have passed. Today, the once-powerful brand manufacturers find themselves in direct competition for shelf space with the chains that are their biggest customers, like Tesco and Wal-Mart. Too many companies are still building their strategies around outdated myths that Private Label Strategy debunks. Chapters of Private Label Strategy cover how to compete on price with private labels, how to compete on quality with premium store brands, how to use private labels to maximize retailer profitability, how to cultivate innovation, and much more. "The financial community, of course, presses companies to be specific on the anticipated numbers because it makes the work of the analysts easier. But it may not be wise to play along with this game. For example, Nestle has a policy of not promising specific financial targets but instead articulating its strategy and letting analysts do the work of computing the expected numbers." An absolute "must-read" for anyone involved in branding responsibilities or branding strategy.