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Ben Smith Retail Leverage

Football the Buzz & Private Brand

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Occasionally I invite industry leaders or people I just think are interesting to guest post. The following guest post was written by Ben Smith, Director of Trade Marketing for Eastman Kodak Company. The post was originally published on the blog Retail Leverage that he writes with  Vincent Young, Director of Brand Marketing – Americas Region for Eastman Kodak Company. Football is an intriguing metaphor for the dog eat dog world of Branding. Ben hits the nail on the head with the following quote; “the brands that win will be the ones who can offer the retailer financial growth, not a mere redistribution of the same amount dollars.” Forget the artificial distinction of Private or National brand, simply create great brands that deliver loyalty and ultimately sales.

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Image via Wikipedia

Understand Retailer Private Brand Strategy By Watching Football
I never pass up a good analogy to help myself understand a complicated story, and spice up a boring one. The growing use of private brands (or private label) by retailers has become the key story of this new era in retail marketing. There are so many different s

tories and perspectives floating around, I think what gets lost in the buzz is the underlying reason of why retailers have turned to private brands. So what does retailer’s private brand strategy have to do with the NFL?  On the eve of the NFL draft, I will help you look at retailer’s private brand strategy from a new & more fun perspective.

LOOK AT AMERICA’S GAME:
In hindsight, the NFL probably truly became America’s game somewhere between the baseball strike (‘94) and the rise of online fantasy football leagues (‘99-01). Now of course the Superbowl has long been the dominant tv event, but as we all know, a large number of people tune in just for the commercials and the experience. Regardless of how it got there, the NFL rose to the top of american sports (and culture), and eventually found itself in a position that anybody who gets to the top of their field struggles with – staying #1, a

nd continuing to grow.

WHAT FUELED THE NFL’S GROWTH?  TV!
In the spirit of Michael Scott of “The Office”, I’ll quote Wikipedia – because if it is on Wikipedia it has to be true (and in this case it is): “The television rights to broadcast National Football League (NFL) games are the most lucrative and expensive rights of any American sport. It was television that brought Professional Football into prominence in the modern era of technology. Since then, NFL broadcasts have become among the most-watched programs on American television, and the fortunes of entire networks have rested on owning NFL broadcasting rights.”

WARNING – RETAIL PARALLEL COMING:  Think about how the NFL’s relationship with its TV networks has similarities to Retailers relationships with the branded manufacturers whose goods they sell in their stores. Don’t get hung up on who makes & who sells – just stay with me here. Without the TV networks, or without the branded goods, neither the NFL or retailers would be in their positions of power – each needs the other. Would the NFL be where it is today without the TV networks? Would Walmart have gotten where they are today without finally breaking through the public’s perception that Walmart carried the same quality branded goods as other retailers?

FOLLOW THE MONEY / DRIVEN BY GROWTH:
Like anyone else who makes it to the top of their field, being #1 is not enough.  Staying #1 is the challenge, and growth is the fuel that you need to do it.  While I am sure the NFL was grateful for the various networks role in their success, they started thinking in the spirit of what have you done for me lately?  In 2003 the NFL, in a dramatic step, launched the NFL Network, in effect the NFL’s own private brand.  In one fell swoop, albeit over the last 7 years, the NFL Network has delivered growth to an already large pie, provided additional control and influence over their product, and increased their leverage for future broadcast contracts.  Here are some examples:

Increased The Value of Their Own Product

  • Turned the NFL draft from an afterthought to an event, and starting this year, a prime time event, adding Thursday night and Friday night.
  • Creating something out of nothing by turning the NFL schedule release into an event.
  • Turned the season kickoff into a big Thursday event on NFL Network.
  • Flexible scheduling – more control over late season schedule also means they can deliver better games for NFL Network late season games.
  • Raised the stakes in the pre-game show arms race on all networks by securing top talent for their own pre-game coverage.
  • Ultimately turned the NFL into a 24/7/365 story.  The other sports have 1 season.   The NFL is year-round.

Expanded Distribution / Grew An Already Large Pie:

  • Added Thursday night football on NFL Network, now up to 8 games starting in early November.
  • Added a Thanksgiving Day game on NFL Network.
  • Expanded preseason games coverage.
  • Made NFL Network a must-have offering from cable providers, which they in turn have to pay NFL for
  • Created the NFL Redzone channel – an additional premium offering on game days, powered by content from the NFL / NFL Network

There is no denying the NFL Network has had a huge impact on fueling additional growth and success for the NFL.  Obviously the NFL has total control over their product, but imagine if retailers can scratch the surface of what the NFL has done with the NFL Network – you can see why retailers are pursuing private brands with such vigor.

RETAIL LEVERAGE TAKEAWAYS:
A key principle that Retail Leverage advocates brand marketers understand that it is about the retailer’s fight, and not your own; the brands that win will be the ones who can offer the retailer financial growth, not a mere redistribution of the same amount dollars. The key reasons that retailers are increasingly leveraging private brands is that brands didn’t satisfy the retailer’s need for financial growth, and they got hung up on their own fights. So the retailers decided to take control.

The NFL apparently concluded that the opportunity for additional financial growth via the existing networks was not enough.  The NFL saw opportunities to increase the distribution of their product, and improve the quality of their offering.  The NFL Network has achieved both of those goals and continues to do so. At the same time, I believe the other networks have raised their game since the NFL Network came into existence.  Thanks to the rising popularity of the NFL, fueled by TV, it is a WIN-WIN-WIN-WIN; for the NFL, for the original networks, for the cable/satellite providers, and for consumers/fans of the NFL.  I thank you; my wife – not so much.

When I look at how the NFL used the NFL Network to gain leverage, I have a greater appreciation for how retailers are using private brand strategy to improve their own fortunes.  If anything, it should make brand marketers work harder at providing value (and growth) to retailers – and the brands that get it have an opportunity to gain Retail Leverage in their own right.  And perhaps the greatest point – the next time my wife complains about how much football I watch, I can just tell her I’m studying retail strategy!


\"\"Benjamin Smith is Director of Trade Marketing for Eastman Kodak Company.  Prior to joining Eastman Kodak, Mr. Smith served as Worldwide Product Manager for Consumer Printers at Lexmark International. Ben holds a BA from Miami University and an MBA from the University of Kentucky.

Retail Leverage

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Dennis Furniss Kaleidoscope

The Private Label Pendulum

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 dfurniss@thinkkaleidoscope.com.

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Anthem Eric Ashworth

Is Manutailing the Next Generation of Private Brand?

The following is the third post in a three part series written by Eric Ashworth, Chief Strategic Officer of Anthem Worldwide for the package design website Popsop. Manutailing is a great concept that should be tested, the real question is are there great retailers and manufacturers willing to test it?

Manutailing: Part III – CPG/Retailer Partnerships
CPGs need retailers – the top ten retailers now generate an average of 30 to 45 percent of a given manufacturer’s global sales. And retailers need CPGs, not only to allow for well-known national brands among their selection but also for their ability to keep incumbent product categories relevant through innovation and line extensions.

Quite simply, this calls for the marriage of CPGs’ new product development expertise and retailers’ access to customers and ability to execute. In an era marked by constant questions about traditional media’s effectiveness, a distracted customer base, and a vast majority of purchase decisions being made at the store shelf, who can justify the traditional brand development cycle?

What about new ways of combining specific attitudinal learnings from research with the behavioral trends of real shopping activity? What about creating brands that consumers truly need and want – and having the ability to modify learnings in a fraction of the time based on real consumer behavior? What about taking the best practices of manufacturing brands and blending them with best practices of retailing brands? This is manutailing.

Read the entire post

\"EricEric Ashworth is Chief Strategy Officer for Anthem Worldwide where he leads large-scale branding initiatives for major retailers and CPG companies across the globe. Eric has held senior brand and marketing management positions at global branding agencies and consumer product companies. Eric has served as a guest lecturer on brand strategy at the Haas School of Business at the University of California, Berkeley.

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Anthem Eric Ashworth

The History of Private Brand.

The following is the second post in a three part series written by Eric Ashworth, Chief Strategic Officer of Anthem Worldwide for the package design website Popsop.

Manutailing: Part II – History of the Private Label
\"GenericThe History of Private Label

For over a century, consumer packaged goods manufacturers have dominated brand innovation, formulating products and driving consumer motivation for purchase, while retailers have served as the real estate managers governing where these new products are sold. Essentially, CPGs invented and retailers stocked the shelf. This approach became so integrated that through the concept of category champions, CPGs took control of retailers’ merchandising strategies – and in some cases drove store layout. But as this model evolved, the more progressive retailers began packing products under their own brands and the industry of “private label” was born.

Private label was initially successful due to the simple proposition of value alternative. For individuals shopping on a budget or for higher income shoppers in low involvement categories, private label provided an attractive price point. This concept flourished, as it not only provided incremental revenue for the retailer via better margins, but it also positioned the competing CPG offerings as more innovative and of higher quality, thereby substantiating the price premium at which they still operate today.

Read the entire story

\"EricEric Ashworth is Chief Strategy Officer for Anthem Worldwide where he leads large-scale branding initiatives for major retailers and CPG companies across the globe. Eric has held senior brand and marketing management positions at global branding agencies and consumer product companies. Eric has served as a guest lecturer on brand strategy at the Haas School of Business at the University of California, Berkeley.

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Anthem Eric Ashworth

Manutailing & Private Brands – the Future is Now.

This is the first in a three part series written by Eric Ashworth, Chief Strategic Officer of Anthem Worldwide for the package design website Popsop. His manutailing concept is an intriguing take on Private Brand.

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Manutailing: Part I – The Current Landscape

The time is right for the marriage of CPGs’ new product development expertise and retailers’access to shoppers and ability to execute. Today there are constant questions about traditional media’s effectiveness, a segmented customer base, and a vast majority of purchase decisions being made at the store shelf. In this light, who can justify the traditional brand or new product development cycle? Something more insightful, more collaborative and – above all – more agile is called for. This is manutailing.

The following is the first of three installments beginning with an evaluation of the current market landscape, followed by the history of the private label, and concluding with a closer at Manutailing.

The Landscape Is Changing

Today, retailers – specifically grocery and mass merchandisers – are rethinking conventional business models. Once relegated to replicating CPGs’ offerings with a lower price and lesser-performing “value” alternative, they are now creating brands based on distinct consumer need states. And this, given the recent history of PL success stories – including Kroger’s Disney wellness line as well as Safeway’s Eating Right and “O” Organics – is just the beginning of larger changes to come. There are three key elements driving this belief:

  1. Consumer Behavior:
    Comprehensive analytics of loyalty card data are providing deep behavioral insights into retailers’ customers. By understanding the combinations of purchases in shopping trips and analyzing switching behavior over time, retailers are gleaning insights and perspective that surpass those available to CPG’s.

Read the entire story.

\"EricEric Ashworth is Chief Strategy Officer for Anthem Worldwide where he leads large-scale branding initiatives for major retailers and CPG companies across the globe. Eric has held senior brand and marketing management positions at global branding agencies and consumer product companies. Eric has served as a guest lecturer on brand strategy at the Haas School of Business at the University of California, Berkeley.