A LOOK ON THE BRIGHT SIDE OF PRIVATE LABEL BRANDS

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To read the pages of Advertising Age, one would think that store brands were noth ing but bad news for the business of brand marketing.

Actually, the competitive pressures of store brands are a blessing to brand marketers in many ways. Store brands will, in all likelihood, dispose of "pay to stay" brands that simply add to category spending and clutter. In the long run, store brands will force branded marketers to accelerate product innovation and improve consumer satisfaction.

In the short run, however, marketers must "sell smart" to protect, their base. Advertising and value-added promotions are vital to building national brands in competition with store brands, but so is a strong, in-store presence.

The store brands battle cannot be won on the primary shelf in most categories. Shelf talkers and other primary shelf "events" invite price comparisons with store brands.

Promotional expenditures and trade tactics must move the battlefield to other locations-displays, floor stands, racks and bins-where the comparison is made to perceived everyday prices-not store brands.

Value pricing will not achieve the intended effect because EDLP effectively removes "events" from the trade's promotional calendar, and the branded product is literally a sitting duck for "compare and save" shelf assaults from store brands.

Brand marketers also need to understand why consumers use store brands, and how usage varies by category.

Too often, assumptions about the store brand user are misplaced, making the brand marketer's response off-target. Value-focused consumers will respond to "pantry-loading" devices like multi-packs, bonus-packs and Buy 1 (2,3) get 1 free. If offered on an account-exclusive basis, trade support will also improve. The "educated" consumer will respond to "higher order" promotions like charity tie-ins (preferably local), register tape/smart card continuity programs tied to local events or institutions, and environmentally friendly packaging.

Understanding the consumer also means knowing how many units a heavy user-who often contributes disproportionately to category sales and profits-buys a year. Usually, it's fewer units because they buy the larger packages that offer greater cost savings. Unfortunately for brand marketers, the cost differences between store and national brands on a dollar-amount basis is greater on these large items.

In response, brand marketers should execute more off-shelf features for larger packages. This strategy importantly shifts merchandising activity toward gaining the dominant share of annual consumer purchases rather than single transactions. It also takes consumers out of the market longer, forestalling yet another "compare and save" opportunity.

Finally, leading brand marketers can make important inroads by shining the price comparison spotlight on their weaker branded competitors. A typical retailer strategy is to feature leading brands aggressively to build traffic, then present an on-shelf private label comparison, and keep margins high on the No. 3, No. 4 and No. 5 brands.

Because retailers depend on lead brand advertising and promotion to bring shoppers to their doors, leading brand marketers can escape the "compare and save" quagmire by encouraging the trade to set up price point comparisons against other brand and provide feature and display activity to the leader.

Store brands, like the "Japanese invasion" in the automotive industry, should not be regarded as a dreaded development. American cars today are better built, offer superior value and are more smartly marketed because of Japan's once-unwelcome competition. Consumer packaged goods marketers should view the surging popularity of store brands as a signal that it's time to return the focus to value, that simple synthesis of quality, price and promotion.

Most important, don't forget that store brands cannot exist without national brands. The essence of the "compare and save" strategy is, after all, to have something with which to compare. It's a match-up from which brand marketers can benefit, with the right combination of effective in-store merchandising, added-value brand promotion and, of course, image advertising.

Mr. Kelly is a principal of Silvermine Consulting Group, Westport, Conn.

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