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CPG Connect | Status: is encouraging members to get involved i... Read more
Posted in December
Interesting Article..
By John Karolefski

The right combination of national brands and private label is needed to achieve a balanced product category. Such an assortment will be able to communicate the intended category strategy to shoppers, according to Tom Ewing of T. Marzetti Company, maker of dips, dressings, frozen breads and croutons.

“The most effective way to determine if the tactic you need to execute should utilize a manufacturer or retailer brand is to determine if it is intended to compare or contrast the retailer with the competition,” he said. 

He advises using manufacturer brands to get the consumer to compare, and using retailer brands to tell the consumer that the retailer is different.

“By molding a category merchandising plan that utilizes the strengths of each brand, a merchant can appeal to consumers with a wide range of value expectations to meet the objectives of the category,” said the director of national accounts for the Columbus, Ohio-based company. 

Ewing defines “manufacturer” brands as those that are national, regional or specialty. Products bearing the trademark of the retailer or wholesaler are “retailer” brands.

“Consumers buy a mix of brands, so a focus on how the consumer looks at brands will help us find a way to use the strengths of each brand to form a cohesive merchandising plan for different categories,” said Ewing recently in Chicago in a presentation at a private label conference hosted by the Institute for International Research (IIR). 

In other words, he said, multiple brands are tactical tools to achieve the category plan.

He explained that category roles can either be destination, routine or occasional/seasonal. In a category management model, there are strategies that are used to focus merchandising in terms of how the category relates to the consumer. Regardless of the category role, the strategies are the same, he said. They are just executed differently.

He listed six category strategies: turf protecting, traffic building, image enhancing, transaction building, excitement creating and profit building.   

Use different brands to execute the tactics to achieve the strategies that have been determined to be appropriate for the category, Ewing advised, depending on the role that category is to play in attracting consumers to the store.

“Retailer brands are best used in tactics where the retailer wants the consumer to differentiate them from other retailers,” he said. “Once executed, these tactics are very difficult for another retailer to match because the product’s brand name will be different.”  

Retailer brand strengths are value, quality, and uniqueness, according to Ewing.

Value has been historically the tactic that retailer brands have been used to execute. Stressing the quality of retailer brands to consumers helps to build overall store quality.

“More recently, the use of upscale retailer brands to stress unique products –
only available in their store – has been used to build consumer loyalty,” he said. “A number of retailers around the country have developed upscale brands to execute this tactic.”

He listed manufacturer brand strengths as price, promotion, and assortment

Manufacturer brands are best used for tactics where retailers want to compare themselves to other retailers in the market, according to Ewing. It is easy to execute a price comparison because other retailers in the market carry the exact same items. A low price will be recognized by the consumer as a value at the retailer.

“Promotions also lend themselves to manufacturer brands because they are used to attract consumers to do more of their weekly shopping at the retailer by establishing a value image to consumers,” he said. “A retailer can also show a comparison to other retailers by having a larger assortment than other retailers, thus showing more sizes, flavors, colors or aromas than competing retailers.”

Ewing used the example of a seasonal category to show how manufacturer and retailer brands can work together to deliver exceptional consumer value at the right time of the year. In this category, sales spike significantly at the holiday period, so the manufacturer brand needs to be priced competitively to build traffic.

Transaction building can be done by either brand type depending on the development of the retailer brand in the consumer’s mind, according to Ewing. The key is for the retail brand to build profits all year long to help the category margin survive the discounts necessary for the manufacturer brand during the key holiday periods.

“This can be done by developing an upscale line of products that delivers recognizable consumer value at or just above the retail price of the leading manufacturer brands,” he explained. “This product line creates excitement by having a product line that would be hard for consumers to duplicate.”

When manufacturer and retailer brands are blended into the merchandising plan this way, he added, the category can deliver the best consumer value at the key times of the year and still achieve the overall objectives of for the category.

Are you trying to compare yourself to other retailers? Or are you trying to differentiate your store from the competition?

“When choosing how to execute a particular tactic with either brand,” said Ewing, “evaluating the consumer’s view in terms of comparing or differentiating can be the key determining factor.”
 

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