Here is an intriguing guest post from Dennis Furniss, of the Chicago based branding firm Kaleidoscope. Dennis has an intriguing take on the emergence of Private Brands.
By nature brands are designed to compete, I’d argue that in doing so many of the world’s leading brands are today ignoring a formidable challenge, brand dominance balanced with private label acceptance. The then ignored private label offered little more than good label design across its products.
Today that has all changed, take a look at the products and merchandising environments in some of the world’s leading retailers, have become much more sophisticated in appearance and increasingly adept at managing and supporting standalone brands. Competing with, and often outselling, more established and well-known national brands has become all too easy.
Forget competing for consumer loyalty, national brands simply aren’t spending on what really counts, consumer experiences. And as the world’s biggest brands focus on category management and new product innovation, retailers like Sainsbury’s, Walmart, Target, Tesco, InterSpa, Whole Foods and other major chains are slowly but surely plucking the best marketing minds from the world’s leading consumer goods companies. Private Labels are ramping up.
Today’s retailers are less dependent on agency support and their internal creative support teams are vast. Walk into any of the world’s private label producers and you’ll find packaging designers, marketing staff, copywriters and promotional teams, all of whom are devoted to the creation of new private labels. And while packaging remains a core focus, private labels now leverage a set of content delivery tools that national brands can’t possibly compete with. Especially when retailer spending on targeted campaigns for web, TV, direct marketing and print matches or exceeds the total budget spend of many national brands. In short, private labels have awakened to marketing.
So, for big brands it’s simply not enough to have great product ideas. Brands need to be market makers and influence the broader world in which we live. More than merely influencing how they look and spotting the next innovation, brands need to reawaken to great thinking and be more entrepreneurial in spotting real marketing opportunities. McDonald’s has gotten the message and judging by overseas sales this year, they’re lov’in it! When was the last time you saw a McDonald’s threatened by private label? I’ll let you think that one through yourself.
The truth is that far too many food and beverage manufactures are now heavily invested in private label production, in many cases directly competing with their own brands. This degree of risk management for the vast majority should be major concern. The harsh truth is private labels simply cost less to produce and market, and “competing while cooperating” with the private label retailer presents many challenges.
The irony is a sobering problem for both big brands and national retailers. If the pendulum swings to far ether way – both lose!
The author, Dennis Furniss, is a Partner at Kaleidoscope, a branding and design company. Contact him at email@example.com.