An Introduction to Retail Management & Marketing

Book 3 Retail Marketing

Book 3 Sessions Session 2: Retail marketing planning Session 3: Consumer behavior Session 4: Retail brands

Session 4: Retail brands What is a brand? Growth of retailer own-label brands Types of retail brands Retail brands and own-label brands Conclusions

Known brands tend to dominate markets they operate in Importance of strong brands means that brand building has become an important marketing activity Figure 4.1 shows some of the best-known brands in the UK

Branding: Process by which companies distinguish their P offerings from competition, by developing a distinctive name, packaging & design a brand is created. Some brands are supported by logos - Nike By developing a distinctive individual identity, branding permits customers to develop associations with brand & eases purchase decision.  Today retailers are brands themselves rather than distributors of manufacturer brands. This is due to extensive development of own brands & a marketing-orientated approach to retailing. Increased levels of trust from customers.

What is a brand? A brand: core P augmented by additional distinctive features which add value & deliver specific benefits to its users Retailers position themselves as brands For retailers, building a strong brand adds to the value of the company, influences consumer behavior, can act as a barrier to competition & lead to high profits. Brand equity: measure of power & importance of a brand in marketplace based on value attributed to a brand by its customers & its assets

Retail sectors Choice criteria we use to make buying decisions align with brand proposition: offer brand makes if we buy a particular P Ex: boots are core product but there are some additional features which can augment the product to produce a brand: - Quality & design - materials highly durable & boots are designed to maximize comfort on a long walk. - Well-known manufacturer brand is an additional guarantees & service offers, which augment original P Successful brands are built by providing quality products which deliver the perceived benefits customers expect. Brand establish a differential advantage over competitors by creating a unique position in market & in consumers minds Strength of a brand's position in the market is based on its domain, heritage, values, assets, personality and reflection

Growth of retailer own-label brands Sales of retailer own-label brands have increased : Growth of retailer brands known as own brands, own labels, private labels Reason for the growth of own brands Retailers can increase their margins if they did not have to pay for manufacturers' branding overheads. Existence of ≠ customer segments in marketplace, some very price conscious & others not. Thus, manufacturers could make P for supermarkets without affecting sales Shoppers make significant savings when choosing own brands

Retailer brands are important in grocery sector as they account for a significant proportion of sales. Indeed contribution from own brands has been increasing rapidly

Types of retail brands Retail brands play a strategic role There are many different types of retailer brands Important to differentiate between them in order to understand role of particular types in retail strategies Table 4.2 shows a typology of retail own brands

First step: Varlery and Rafiq (2004, p. 208): suggests own-brand development strategy: retailers start with generics & then move up the own-brand ladder as they gain experience & confidence in own-brand development. William and Jary (1997) suggested a similar staged development of own brands: retailer begin with generics followed by cheap store brands, which are a step above generics although still of lower quality & much cheaper than manufacturer brands. 

Next step up : Reengineered low-cost brands Retailer examines branded P & packaging to see how costs can be reduced, whilst offering same functionality. Next stage is to offer 'par quality' store brands, which are aimed to match manufacturer brands in terms of quality & performance but at prices 10 to 25 % lower Price discount is possible because retailers' marketing expenses are lower & they can subcontract production of store brands to manufacturers with excess capacity. Final stages, retail brands take on a leadership role through positioning & innovation with price parity or a premium price relative to manufacturer brands & hence better margins than traditional own labels

Retail brands and own-label brands

Retailer should maintain a balance between his own brands & manufacturer brands. Retailers sell manufacturer brands but increasingly they are introducing their own brands Enhancing retailers' power in the supply chain. Retailers get good levels of profit from selling manufacturer brands but so do their competitors Therefore, developing brand equity in its own right increase revenues & profitability Retailers use manufacturer brands when developing their own image & brand equity.

The dimensions of retailer image Retail brand identifies G/S & differentiates them from those of competitors. Retailer's brand equity is when consumers respond more favorably to its marketing actions than they do to those of competing retailers Retailer attributes influencing overall image, e.g.. the variety & quality of P, S, & brands sold; physical store appearance, behavior & S quality of employees; price, depth & frequency of promotions. These attributes are categorized into smaller set of location, merchandise, service, & store atmosphere