Private Label growth, which had slowed throughout the pandemic, is poised to make a comeback in 2023, according to a Numerator study published in January: Private Label Trends: Top Brands, Consumer Sentiments & More. I Numerator
A few key highlights from the Numerator Report:
It is tempting to increase promotional depth of discount as we see Private Label infringing on market share, which may be the right tactic – but it may not be. It's important to understand your brand’s interaction with Private Label first. This can be done by utilizing some simple household panel and pricing analytics to answer the following questions:
If you find that consumers are not trading between your brand and Private Label, it is important to stay the course, balancing your trade promotion strategy with maintaining your brand equity. Too many, or promotions that are too deep, can damage your brand equity – cheapen your brand with the consumer and train them to only purchase when there is a sale.
What are the benefits the consumer perceives relative to price – for your brand vs. store brands. Functional benefits are important but be sure to consider emotional benefits as well as the importance of popular social impacts such as sustainability and corporate responsibility. If you can’t express your consumer value equation on all elements, it might be time for some research.
A good place to start is importance/performance research – understand the elements that drive purchase in your category and how your brand, and all competitors, are perceived relative to those important attributes. Evolve your brand strategy around important attributes where you have strength or differentiation.
This type of research could spark new thinking to shore up ways to insulate your brand against Private Label encroachment. Are there innovations in product and packaging that should be tested? Is your messaging creating the right differentiation in the consumer’s mind? Challenge and test your assumptions on brand strength and differentiation.
Packaged goods brands can use trade promotions like price reductions, in-store displays, and special packaging to increase their visibility and make their products more attractive to customers. However, promotions don’t have to be brand equity diluters. The best way to ensure your trade budget works for brand equity is to work with retail partners to find the programs they care about, that also fit in with your brand message.
Another equity builder are in-store demos, sampling products to would-be consumers to build trial. While most trial-building programs are expensive, partnering with a retailer in this way also serves the dual purpose of strengthening both the customer relationship and consumer relationship.
Here’s an example that pulls these concepts together:
By creating an experience for consumers around solving hunger in the community, the brand was able to build equity with young families in the area. And unlike short-term price reductions, this equity will serve them well long after the promotion has ended.
If you find consumers DO switch between your brand and Private Label, that price is a driver of switching and that your value proposition makes it difficult to differentiate, it will be vital to MAXIMIZE both your price gaps and promoted strategy relative to your revenue, sales and profit goals.
Trying new strategies requires the ability to properly evaluate them. Revenue Growth Management software with a strong trade promotion management platform and optimization capabilities should provide you with the ability to harmonize your data sources, create the right models and give you the software to evaluate trade events, run scenarios, war-game and make decisions quickly.
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