Private Label Product Optimization Against Consumer Packaged Goods

Did you know that private labels products now account for up to 45% of all retail sales in key European countries, and 21. 5% of all retail sales in the U. S.? If you looked at these statistics ten or twenty years ago, it would be a different story. But recently, private-label products have become increasingly popular with consumers. Yet, you don't see these products spending millions of dollars on television and print advertising. Still, in most cases, private label products deliver significantly higher margins to the retailer than the traditional consumer produced goods (CPG) brands.

So, it is surprising that the private-label strategies are not pursued with the same level of vigor or investment as their branded brethren. Is it because retailers are still completely sold that the only way to spend their marketing budgets is on traditional advertising?

In recent years, most retailers have been able to remove the stigma so long affixed to private-label products - that they are an inferior, "generic" alternative to the CPG brands. However, the reasons why consumers prefer a particular branded product versus a particular private label product or vice versa are not immediately visible.

In the grocery industry, research shows that consumers display considerable favoritism for branded product with certain foods and are more open to private label consumption with other foods. For example, consumers are more likely to purchase a recognizable brand name can of beans; however, when it comes to cheese they prefer private label product. Perhaps this is why the private label strategy is not as widely accepted as CPG.

Regardless, it can't be denied that retailers have much to gain by at least testing the waters with private label. Market research agencies are able to work with a large national retailer to optimize their private-label product strategy and package design. white label products These agencies employ the same rigorous branding development practices used by the big CPG brands. This includes immersive studies into the lives of consumers - how particular brands and products fit into their daily lives. Market research agencies are able to determine what about a private label product speaks to a consumer and pushes them to make the purchase.

Many brand marketing agencies develop concept testing programs to evaluate various design and messaging options. Some even have consumers evaluate the competitive products, both CPG and private label. After all, when it's all said and done, the consumer needs to choose the private-label product even when it is displayed right next to the familiar brand icon. Although the decision to buy is made in the store, it is influenced by larger CPG brands long before the consumer parks his or her car.

When executed properly, private label strategies can result in a competitive product that can win at the shelf, without a massive marketing campaign. When it is pulled off it can pull the rug right out from under a billion dollar brand.

Doug J. McIntyre is the founder and CEO of Cult Marketing - a brand marketing company. An authority in his field, Doug has been quoted in the Wall Street Journal and his creative ideas have been featured on TV broadcasts.

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