Advertise with fastmoving.co.za
 
 

Dr Magda Nenyz-Thiel
Dr Magda Nenyz-Thiel

Are private label brands a threat to national brands?

RETAILER NEWS

Aug 12th 2011, 15:49

It’s a question that may keep many marketers and brand managers awake at night – are private label brands encroaching on national brands? The answer is yes, and no, according to Dr Magda Nenycz-Thiel, a senior researcher from the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia.
 

Dr Nenycz-Thiel was recently hosted in South Africa by Caxton Magazines and The Newspaper Advertising Bureau (NAB) to explore the impact of private label brands in the retail space.

John Bowles, Joint Managing Director of NAB says, ”Private label is big business around the world and the more we see retailers getting this right, the more manufactured national brands are going to have a tougher time getting bought and thought of.”

While national brands and private labels each have their own advantages and disadvantages, the following insights were gained from Dr Nenycz-Thiel’s week in Africa:

Magda states that private label users are no different from those that buy national brands as they do not appeal to different buyers groups. They fall in line with normal market share and buyer stats where big brands simply have more buyers than small brands – whether they are national or private brands.

Private labels only show some indication of creating store loyalty when they are more qualitative, priced higher and less frequently bought goods and the rejection of private label brands is very low. Often, consumers who reject private labels and national brands do so for opposite reasons. Private labels are rejected before they are even tried, mostly because of poor perceptions on quality and a lack of trust from the potential buyer. For national brands, trust is established post purchase once consumers have tried and experienced the brand, therefore rejection tends to mostly occur after trial – the opposite of private label brands.

Dr Nenycz-Thiel makes the point that national brands have better knowledge by the non-users of a brand in the category than private label brands do. This is mostly because they advertise out of store whereas private labels do not, and are therefore not known by the category non users or buyers. Private labels tend to have better exposure in-store because of their shelf space advantage and in-store promotional support.

On the issue of private label premium brands, Magda states that they are slightly different in the sense that they tend to be rejected less and are well known by non-users of the category. This is generally because they are packaged well, good quality and advertised out of store. Otherwise they perform in line with general market share statistics of the category they fall into. However, premium private label brands do have a very negative effect on second tier national brands that don’t advertise that much or at all. For these brands, there is generally no need for retailers to stock them as they don’t generate much traffic to the store.

Magda’s main recommendations and implications from the findings are that all brands need to be mentally and physically available to their category buyers.

Because heavy users are a small segment of consumers, retailers need to remind light and non-buyers of the category of their specific brands, at a time when they could be in the market. This is where growth of any brand (private or national) will come from.

Another insight is that private label brands should try and initiate trial of the brand through sampling and reinforced quality of the brand. Retailers should advertise private label brands out of store, particularly for categories that are not bought that often, or are more qualitative (definitely relevant to premium private label brands). Reaching the maximum number of category light and non-buyers where they have stores stocking those brands is crucial for the retail marketer.

National brands should regularly monitor their quality and maintain regular consistent good branded advertising that reaches the maximum amount of category’s light and non-users – the heavy users will know their favourite brands well enough and will need little reminding – marketers should get to them anyway with high reaching mass marketing.

John Bowles adds, “If maximum reach is important then local media offers the solution. Community newspapers reach on average close to 70% of decision makers in every area they are delivered to each week (ROOTS 2010) – more than any other print option. They are delivered around the stores where brands (private or national) are stocked, making the message relevant with limited wastage. These buyers use them to plan their shopping every week making them the ideal vehicle to meet the challenges both private label and manufactured national brands face. NAB has great relationships with retail around the world as well as marketing scientists like Magda, so offering insights into big topics is our number one priority.”

 

Read more about: | fmcg brands | retailer news | marketing | retailes

Related News

Multi-million rand Rustenburg Mall underway
09/09/2019 - 11:07
Rustenburg shoppers can look forward to a brand new shopping centre – Rustenburg Mall – set to introduce its first phase in April 2021.

Marketing the Future – unlocking the human element in a digital world
03/09/2019 - 12:59
The IMM Graduate School, in partnership with Nedbank, will be hosting the second annual half-day Marketing the Future Conference in Johannesburg, Durban, and Cape Town. This year’s theme, “unlocking the human element in a digital world”, examines how the role of marketers continues to change as technology develops.

3 Data trends shaping digital marketing in the next 18 months
28/08/2019 - 14:47
As we move into the next phase of the digital revolution, data will take an increasingly important role in how brands shape their customer experience and interact with consumers. As wearable computers proliferate and everything from cars to smart speakers to industrial equipment is connected to the Internet, people and devices are creating more data than ever before.

Introducing the Cape Fine and Rare Wine Auction
23/08/2019 - 10:07
With the world market increasingly focused on the fine and rare wines from South Africa, the Cape Winelands is in a stronger position than ever to showcase its fine wine investments. This year, the Cape Winelands is proud to host its first-ever Cape Fine & Rare Wine Auction, an evolution of the historic Nederburg Auction in 1975.

Franchises reap the rewards of tech-enabled local marketing strategies
22/08/2019 - 11:26
One of the great challenges facing franchise businesses is to maintain their group brand identity while enabling Local Marketing Strategies at branch level. Those that do, grow at a rate of about three times than that of their competitors.