Brand Management – CL vs NB (Part II)

Last week we reviewed the differences between national brands (NB) and Control Label (CL) products and we answered a consumer-conundrum question: Can we get more for less?

Answer: YES! 

We discovered that Control Label products (i.e. President’s Choice, Kenmore, Life Brand – also called private label) can develop products that are premium (i.e. premium ingredients) to the comparable national brands…. yet CL products maintain better value because of National Brand overhead.  Recall, NBs have many  people working on only one brand and spend millions and millions in marketing and promotions! 

Conversely, Control Label products do not spend close to those dollars on promotions – don’t believe me?….Just think how much Coke spends on a single commercial for a Superbowl advertisement!

So why do Retailers develop control label brands?  

  1.  More profit!  While some retailers may say different, the major impetus for control label innovation/sku proliferation is better Penny Profit (more immediate money in the bank).   

Therefore the higher the control label sales penetration, the better the profits!   They want you to have more of their private label products in your basket.

A fast nickel beats a slow dime

Anonymous

        2.   When you enjoy a Retailer’s private label product, the Retailer gets an intangible benefit called Consumer  Loyalty.  Priceless.  A retailer can gain our devotion and “repeat visit” if you love their Control Label Brand.  How?  Because you won’t be able to get it anywhere else but at that retailer!   And they are hoping you will do a full basket shop while getting their unique brand only available through them.

But retailers still need a balance of National Brands to compliment Control Label on the shelf.  Let’s face it – you can try to knock off Coke – but it just ain’t a Coke at the end of the day.  Even when it’s cheaper we consumers buy what tastes best (usually!).  Or perhaps it is prestige/image thing?  Does one look better serving to your guest Perrier or San Pellegrino or a generic brand?   

Just make sure you are checking the ingredient deck and comparing apples to apples to get the best value.

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