Analysis of an article “Brand Killers”
This article discusses present and future market trends and possible effective responses to these trends in the marketplace. The main idea of the article is to describe the paradigm shift in the market place and show how the past power house of the market is now shifting to the retailer or private Label brand. At present, with an increased set of brands to choose from, consumers are deciding the purchase of a Particular brand by weighing various factors like price, quality, store image etc. Both the manufacturers’ brands and private label brands are fighting to attract the consumers on these factors. In the past, lower priced private label brands were equated with lower quality products when they were first introduced. However, in recent times, major retailers have increased the quality level of their private label brands to near or, in some cases, even better than that of the national brand leaders. The article also highlights evidences that the quality of private label brands and price differentiation can help differentiate a retail store and create store loyalty.
Today, in power dimension, store brands or private label brand are in front and center. Not only this but also the consumer have learned that store brands or private label brands are now stands for quality, innovation and lower price product. Brand loyalty is not a thing of the past, it’s just with the power shift toward retailers, and their brands are garnering consumer loyalty. Retailers are no longer ‘the lowly peddlers of brands that were made and marketed by big, important manufacturers.’ Today these private label brands are known as emerging market leader and market ruler with their product which has especial features like better taste, better performance and high quality at a lower price.
From the organizational standpoint, the article provides valuable information about where the industry and competitive market now stands and how it works today in order to formulate threshold or survival strategies for both private label brands and manufacturer or national brand. In article, it is infer that Price, retailer’s reputation and quality are most important factors for shaping consumers’ perception toward private label brands.
It is important to know that which factors can influence the consumers’ attitude toward private label brands and subsequently influence their decision to purchase these brands in order to maintain the present status of market leadership by the private label brand. The retail chains generally priced their private label brands lower than that of the major brands which is a characteristic of most private label brands even today. This results in the price gap between manufacturers’ brands and private label brands providing price competitiveness to the private label brand. The existence of this price gap has important implication as it has been documented that in the absence of familiarity with the private label brands, consumers are more likely to use extrinsic cues such as price, brand name, and packaging to judge the quality of these brands. Thus, traditionally, this price gap has been used by the consumers to infer a quality gap between the manufacturer’s brands and private label brands leading to the perception that private label brands are of poor quality.
After reading the article, I knew that private labels brand will continue to grow in categories where the manufacturer's brand does not add enough value to the customer. Distributors have recognized the opportunity to sale products creating their own private labels and help customers with sourcing instead of only acting as a sales channel for branded manufacturers. 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 or major retail chains like Carrefour, CVS, Tesco, and Wal-Mart.
In conclusion, the article highlights big private labels threat facing by the manufacturer brand. And the article also infer that to address and overcome these threats, manufacturer brand have to change the mind set, partner effectively, innovate brilliantly, price competitively, improve quality constantly, and market creatively.
References:
Peter, J.P., Donnelly, J. H. Jr. (2006). Marketing Management: Essentials of Marketing Management. McGraw-Hill.
