Private Brand Promotion
By Steve Rubow*

When is the best time to promote Private Brands?

A. All the time.
B. When economic indicators are bad and people have to find ways to save money
C. When economic indicators are great and people have money to spend.
D. Never.

If you chose A, you are correct...All the Time! I guess I would have to give you a partially correct if you chose either B or C.

The key to promoting or advertising Private Brands is to know how to promote them, what to say when. Private Brands can be the right marketing tool for any economic environment. This is a relatively new concept for most retailers, who strictly market Private Brands on the price axis and therefore wait for poor economic conditions to allow them to increase their Private Brand marketing activity.

A Balanced Message

There is reason for having a balanced Private Brand message-Quality + Variety + Price. When a Private Brand program can play to all three, then it is a matter of understanding the economic climate ahead. If the total Private Brand message is price, then the use of the Private Brand tool will be more limited and therefore may work better when the economic outlook is less favorable. If, on the other hand, the total Private Brand message centers around quality and variety, then the opportunity to market Private Brands during a poorer economic climate is more limited.

Future Economic Climate

So, what is the economic climate going to be? Monitoring the economy should be a critical function of the person charged with the responsibility to market Private Brands. Knowing the mind-set of the consumer and how it changes during shifts in economic climate is critical to knowing how to communicate with them. This is true for marketing the store as a whole...it is equally critical to marketing the extension of the store’s message, Private Brands.

There are enough signals to indicate that the general economic climate will be less favorable over the next year or so. Look at the contributing factors:

• Oil prices...crude is hitting very close to $100 per barrel. And oil is not only a component in the gasoline consumers use to drive, but is also a key component in heating oil, packaging, transportation.
• Sub-prime mortgages...the peak may have hit on sub-prime mortgages, but still to come is the hit to mortgage fraud, the ARM conversions and credit card balances. All will have similar impact on the consumer household as sub-primes.
• Taxes...many states and local communities are struggling with budget shortfalls, meaning that the opportunity to raise taxes will be alluring. The federal government still hasn’t dealt with the Alternative Minimum Tax spread to the middle-income families either.
• Productivity is great, but this means that incomes are not (and likely will not be) increasing very much over the next year.

Put all of these together and it spells out a greater likelihood of harsher economic times for the average consumer over the next year or so. And if we’re thinking only of gas prices going to $3.50 – $4.00 per gallon, that will be only the tip of the iceberg...food prices are also likely to escalate faster and higher than we’ve seen in a while.

Private Brand Message

What should the Private Brand message be? First, retailers should keep a balanced message and not succumb to the initial knee-jerk reaction to emphasize only retail price. If they keep a balanced message, then when good economic times return, they will be able to build on the total Private Brand platform. With that in mind, here are some approaches that would work to take advantage of the economic situation the consumers are likely to find themselves in over this next year:

• If the retailer has multiple levels of Private Brand quality, now would be the time to emphasize the price-fighter quality level. If the retailer doesn’t have a line of standard quality products, now would be the time to investigate adding one.
• Now is when a “Compare and Save” campaign would work for the national-brand-comparable Private Brand. Providing the opportunity to save on items that are comparable in quality and/or performance to the national brands will highlight the opportunity to save money over what they might typically have purchased. Coupled with a quality guarantee, this would take some of the risk out of trying a new brand for the consumer and still call attention to the quality aspects of the Private Brand products.
• When the consumer saves money in one part of the store, there is an opportunity to spend it elsewhere in the store. So, there is still an opportunity to emphasize the highest quality lines or products, the ones for which there is no direct national brand comparison. Here the message should remain on the points of uniqueness, and not call too much attention to the retail price.

The Right Emphasis

The message is one of balance, not exclusion. Both Quality/Variety and Price need to be mentioned during any economic climate. It’s the emphasis that changes. The “space” (either shelf or ad space) given to Private Brands should not change...if anything, it should be increased. n

*Steve Rubow has over 40 years experience in retailing and private branding and was President/CEO of Topco Associates for 8 of those years. He is currently associated with Leo J. Shapiro Associates, a Chicago-based market research firm (website: ljs.com) and is on the faculty at The University of Chicago. Steve can be reached at steve.rubow @ljs.com.