Brand Management: National Brands vs Control Label – Can we really get more for less? (Part I)

If you are a consumer, read this! Of course, knowledge is power and what you choose to purchase can save you and your family money.

The more that you read, the more things you will know. The more that you learn, the more places you’ll go.”
Dr. Seuss

Today, we will learn more about the Brands we buy and attempt to answer the consumer question –can we really get more for less?

So, you enter the grocery store and now you have a plethora of choice on what brand to buy. So many choices! Well this week we will try to make the decision a little easier and will ponder some questions that you may have asked yourself:
           – What is a ‘Control Label/Private label’?
            – Is there a difference in sensory profiles (taste) across all these brands? For example, at Loblaw do you purchase No Name, President’s Choice or a National Brand equivalent?
           – Or maybe you asked yourself why is there a difference in price between these brands? What’s the best value?

These are some of the questions that continue to mystify consumers and today we will attempt to debunk the Brand-choice mystery!

This will be a TWO-part blog. In Part II (next week) we will continue to explore questions such as:
           – Why do Retailers want us to buy their Control Label ie Kenmore, Master’s Choice, Life, Rexall Brand, etc?
           – Why do retailers have National Brands then? And how do National Brands compete if a retailer’s Control label is strongly entrenched in a Retailer/Merchant Planogram?
           – Why are control label initiatives at the forefront of a Retailer strategy?

So let’s begin.

What is a Control Label? Control Label is a brand that a Retailer owns and quite literally ‘controls’ – for example: the marketing, the name, the spec, the size, the flavour, etc. It can also be called a Private Label and these products are managed in-house. Manufacturing/producing the products, however, is not a retailer’s core competency and thus they team-up with Vendors to produce Control label products. National Brands (ie Kraft, Pepsi, Dove, etc) are not controlled by the retailer and operate independently.

So what’s the difference in all these brands? Some companies have two-tier Control labels. Loblaw, for example, has the discounted No Name and the premium President’s Choice (PC). No Name is developed to ‘match’ the National Brand in terms of specs used and deliver a similar taste experience (albeit some No Name products succeed, some don’t!). PC will use ‘premium ingredients’ versus the national brand and despite the use of premium ingredients, PC’s price image is still less than the National Brand!?

So why and how is control label less expensive? The major cost differences between a control label product and a national brand is ‘overhead’. National Brands spend lots of money on R&D (research and development) and marketing and consumer studies. Moreover, consumer packaged goods companies (CPG) that develop the National Brands, have a team of people (Brand Managers) working on each brand. Conversely, Retailers have only one Product Manager/Developer working on several control label products so their energy is spread, while CPG focused.

Thus the value proposition of control label – ‘more for less’ – does resonate well with consumers! And therefore, Control Label products really can provide more for your dollar!

Stay tuned for next week’s part two edition.

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