Rethinking the Four P’s of Private Brand—Part 2: Price Still MattersMay 3, 2018
As retailers continue to position their own labels more like CPG brands, a strategic approach to the “4 P’s” of marketing for private brand is essential. Daymon’s recent Private Brand Intelligence Report 2018 (available at Daymon.com) included a proprietary analysis across 50 retailers in the United States that looked at each of these key marketing levers. Among the findings were that while price certainly plays a critical role in the positioning of many private brands, many retailers are falling short in making sure that their private brands have a consistent share of voice in pricing strategy.
Now that private brands comprise 17 percent of all retail sales in the U.S. and outpaced the sales growth of national brands by 8 times over in 2017, retailers that fail to have a consistent pricing strategy are leaving money on the table. According to Michael Taylor, Daymon President of Brand Development, it is important to remember that there are several dimensions to price positioning for a retailer’s private brand.
“Of course, the relationship between a retailer’s brand and the national brands is important. But for key items, consumers are also comparing private brand prices between retailers,” says Taylor. “Beyond this, you must also consider these pricing relationships over the course of a year. There needs to be consistency over time. However, we find this is not always fully integrated into a retailer’s pricing strategy.”
The results of Daymon’s analysis show how this can often be overlooked. “In our research, we found that while 83 percent of retailers are running price checks on their key value items—those items that are consistently on promotion and purchased by price sensitive shoppers—only 60 percent of those checks include private brand items,” says Charity Kobrzycki, Daymon Manager of Analytics. “In most cases, we found that even when a retailer is price checking private brands, it isn’t being done consistently.”
Daymon found that this lack of private brand price checking has a real impact. On average, private brand key value items are being undercut by national brand promotions a full 12 weeks a year.
“Retailers can preserve the price image for their private brand by protecting—or shielding—these most important items. However, we found that only 17 percent of the retailers in our study had some sort of protection program,” says Taylor. “For the rest, we calculated that some $147 million in lost private brand sales could be attributed to key items being undercut by national brands. That’s a bottom line sum that can make a difference—and highlights the importance of a robust private brand pricing strategy.”
To learn more about how Daymon can help you build a successful private brand program, contact Mark Fields, Enterprise Growth Partner, at email@example.com or Susan Hunsaker, Senior Director, at firstname.lastname@example.org.