This presentation is about the impact of Private labels on the sales of National and International Brands. It also studies the increasing number of private labels in India.

1. Prakhar Singh

3. A brand placed on products that a large manufacturer
has created for a smaller retailer.
example: DJ&C by Big Bazaar

4.  Private label strength goes up during economic
downturn and down in strong economy
 Offer low cost alternatives to branded products
 Faster production
 Almost negligible R&D cost
 Line filling helps in more shelf space for in-store
brands

6.  Competitive reasons, if we don’t somebody else will
 Profits from private label to be used in advertising of
parent brand
 Diversification
 More shelf space
 More knowledge about the consumer

7.  Private label brands are developing quality products
 Development of premium private labels
 Mass merchandise retailers have more incentive to
develop in-store brands
 Product category extension, i.e. from traditional
food and grocery to apparels and electronics

8.  Conduct a private label audit to inform the top
management
 Calculate private label profitability
 Examine the impact of private label brand in the market
 Close excess-capacity instead of manufacturing for a
private label

9.  National brand manufacturers who produce private label
brands should think hard about their decision because this
production deviates the management’s focus from their own
brand.
 It’s difficult for an organisation to manage both these
activities well.

11.  Brand names affect purchase decisions
 Brands have solid foundation in customers mind
 Significant high brand-equity than private labels
 Brands drive retail store visits
 Excessive emphasis on private labels dilutes strength
of private labels

12. 1. Invest in brand equity
The capitalized value of the trust between a company and its customer.
James burke
2. Innovate wisely
Don’t just go on including line extensions
3. Use flank marketing sparingly
Fighting or flank brands should not cannibalize the core product

13. 4. Build Trade relationships
Inform retailer about the advantages of supporting national brand
5. Educate them about private label profitability
Tell them that national brands bring in more spending from customers
than private label brands
6. Think about the price elasticity before varying prices
Private label brands are twice as sensitive to price gap than national
brands

14. 7. Exploit sales promotion strategies
Prevent customers from buying private label brands by adopting
effective sales techniques like in-store advertisements, incentivise
retailers to drive sales
8. Different strategies for different categories
Think of unique strategies for different product categories

15. 9. Use Profitability as a measure not market share and
volume
10.Take private labels seriously

17.  Private label’s share in the modern retail in India is
about 7%
 Food dominates India's private-label market (76% of
total sales)
 Private Label Market To Reach $500,000 By 2015 end
 Current market share of 4-5%, expected to reach 10%
by 2020

18.  Future Group: John Miller, Bare, DJ&C, Indigo Nation, RIG
 Reliance: Daily Pure, Reliance select, Reliance value
 Tata: Chroma, Landmark, Westside
 Aditya Birla: 110%, Enriche, Pantaloons

19.  Reliance fresh stores generate 25% of its sales from in-
store brands
 Pantaloons gets 50% of its sales from in-store brands
 Shoppers stop generates 20%
 Trent shelves contain 95% of in-store brands

20.  Large population price sensitive customers
 High profit margin in private labels
 Ability to do fast changes in product design to fit
consumer needs
 More customer insight

21. Case Study: Tata Croma

22.  More than 80 % bought Croma because they found
value for money
 60% didn’t believe it was a quality product
 71% strongly agreed upon price affordability

23.  60% people perceived national brands as credible.
 More than 90% believed that national brand products
are high quality
 Mixed views about affordability

24. People buy private label brands because they can’t afford
national brands just like people buy android because they
can’t afford iPhones

25. Recommendations to
Indian National Brands

26. 1. Continuous Innovation: Make un-imitable products and protect
innovative technologies with IP protection
2. Invest heavily in brand equity: because private labels won’t be
able to replicate that

27. 3. Don’t indulge in price wars: it will hurt you. Personal disposable
income of Indian customers is increasing, so building better brands and
products will give fruits in the long run

28. Thank You