Private Labels-

New Success “Mantra” for Retailers

__________________________________________________

An insight into Private Labels __________________________________________________

Prepared By: Group 9

1. Prity Jha2. Sumit Kumar3. Vikas Marwaha4. Kaustuba KV5. Arpit Mohanty6. Mohit Pandey7. Akash Tyagi

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Table of Content

S.No.

Topic Page No.

1. Introduction………………………………………………………….. 3

2. Rise of Private Labels……………………………………………...... 3

3. Why companies are going for Private Labels...................................... 4

4. John Miller-Illustration of Success of Private Labels………………. 8

5. Needs, Wants and Demands catered by Private Labels……………... 9

6. PESTEL and SWOT analysis of MORE……………………………. 12

7. Segmentation, Targeting & Positioning-“Feasters corn Flakes” 20

8. Survey Questions and Responses 24

9. Disadvantages of Private Labels 28

10. Precautions to be taken 28

11. Conclusion 28

12. References 30

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1. IntroductionPrivate label products are typically manufactured or provided by one company for offer under another company's brand. These products are the manufactured goods that a retailer purchases from a supplier, with the intention of renaming, repackaging and selling it under the distributor’s own brand name. The products like tasty treat, koryo, john miller all are the brands classified as private labels. These products are not manufactured by large scale manufacturers but are provided by the retailers themselves. These products are growing quite fast in the Indian market, creating tough competition for the national level brands. The rise of private labels in retail sector also throws a tough challenge in front of national brands.

2. Rise of Private LabelsThe entire 20th century was dominated by the branded goods produced by large scale manufacturers like Coca Cola, Procter and Gamble, Nestle. However, the 21 st century is dominated the by the large scale retail chains like Walmart, Carrefour, Kroger etc. The Ascendency of the retailers and Private labels is shown by the flow sheet below:

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19th Century-Inconsistent quality

products produced by local farmers

20 th Century-Large Scale Manufacturers replaced small scale

farmers

Brand Creation by the usage of mass

communication tools like TV,Radio.

1970's-Retailers began to develop national and international

chails

21st Century-Retailers dominate the manufaturers.

Top 5 retailers are 2-3 times by sales of top 5 manufacturers

Present- Focus of Retailers on Private Labels has

increased. Top Retailer like walmart earns about 40 % of their sales from private labels

The figure above depicts the rise of retailers in the 21st century but more importantly rise of private labels. The top brands today are facing competition today not only within themselves but also from the private labels. Most of the top retailers are having more than 30 % of their sales coming from private labels which means the brands have to compete with private labels for shelf space. In real terms, brands are under attack from the private brands.

3.0 Why companies are going for Private Labels?The increased focus of the retailers on the private labels forces us to think on the reasons for which the companies are going into the private labels. The benefits which the retailers get by private labels are shown below:

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Benefits of Private Labels

3.1 Differentiation

The private label brands help the retailer in developing exclusivity and differentiation. The private label of a particular retail shop are sold at that retail shop only and helps in creating trademark for that store. The private labels are helpful not only in terms of higher margins but are also plays an important role in creating the store brand. Retailers with pretty good private label brands are able to create better sales opportunities for themselves. This helps in increasing the overall profitability of the company. For example brands like koryo, john miller are now considered as trade mark of big bazaar.

3.2Lower Prices but Higher Margins

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Increases the overall

profitability

Creates the store brandAnd better

sales opportunities

Develops exclusivity

and Creates Trade mark

Higher Margins

Reduces cost of delivery

Increased Supply Chain Efficiencies

Eliminates the middle man

The biggest advantage of private label brands is generating higher margins at lower price. The private label brands eliminate the middle man from the supply chain and increases the supply chain efficiencies. This helps in reducing the cost of delivering the product to the customer. Along with this the private labels also have lower advertisement costs as compared to national brands. These factors enable the retailer to offer the product at lower price and still make higher profits. This creates a win-win situation for both the retailer and customer. For example, Reliance’s tea brand sported a price tag of Rs 118 for 500 gms, whereas Brooke Bond, which was placed just next to it, was available for Rs 132 for 490 gms.

3.3 Freedom to create their own marketing plan

Another advantage of private label brands is giving the independence to the retailer to use its own innovative marketing strategies. For the national brand products, retailers are dependent on the marketing of the product done by the manufacturer. Poor marketing strategy by the manufacturer not only result in the failure of product but also erodes the profit margin of the retailer. By selling its own private label product, a retailer can use its own marketing strategy and budgets. This gives the retailer an independence from the national products. By having an intelligent marketing plan, retailer can make a private labeling line fly off shelves.

3.4 Freedom with pricing strategy

Similar to the marketing strategy, private labels also gives the retailers a chance to adopt their own pricing strategy. Many times a manufacturer can wrongly quote the price of a product which can lead to poor sales of the product. The retailer also looses under such condition because these product occupies the shelf space for a longer time. By having its own private label products, retailer can set the price of the product according to the value of the product. Since, retailers have direct interface with the customers; they can quote the product price more close to customer’s expectation and real value of the product. The retailers can directly pass on the price benefits the have from the private label brands to the customers and enjoy the better sales.

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3.5 Strong customer positioning

The private label brands enable the retailer to develop the customer loyalty. By providing the quality product at lower price retailers can create customer loyalty. National brands are sold all over, so there's no real sense of brand loyalty in terms of where consumers buy them. Because private labels are unique to one retail chain, there is the possibility for retailers to cultivate a sense of brand loyalty. By offering a quality private label product retailer can promote the feeling of brand loyalty among the customers and have significant advantage as compared to competitors.

3.6 Safeguard against economic downturns

The private label brand can definitely act as a shield against the economic downturn and global recession. During the recessions, the 'value conscious' shopper is more visible across store aisle than ever before. During the recession periods the margins that the manufacturing company offers are very small for the retailers to survive. The margins on the private labels are higher, as much as 35 to 40 percent as compared to national brands and can enable the retailer to survive the economic downturn periods. The private label sales growth during 2008-09 is shown below:

The above graph clearly depicts that sales growth for the private labels are significant in the developing economies like India, during the recession period. This also means that retailers enjoyed the better sales figure of the private labels even during the recession when the sales of national brands were slithering down.

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4.0 John Miller-Illustration of Success of Private Labels

4.1 Facts about John Miller:

John Miller is a brand is a decade old brand which came into existence in 1995. Came as an extension of the Pantaloon in the executive segment. The John Miller brand is targeted at the premium segment customer Priced at a range of Rs 300- 600 It can be called as the first Indian private label to embark on mass media

campaigns. The brand uses the tagline " makes it look easy " John Miller had grown from a private label to a private brand

4.2 Success Story:

John miller is the first private label apparel brand of the future group. It is a brand is a decade old brand which came into existence in 1995.It is the perfect example of a private label which has not only survived for more than a decade but has also improved its brand image. In fact, John miller has grown from private label to private brand. The future group has more than twenty stores. The John Miller has helped the Future group in following aspects:

1. Differentiation: John miller was one of the very first private label apparel product that came into existence in India. The brand which provides higher quality at lower price is a tough competitor for brands like Peter England. The brand’s success can be estimated from the fact that Future Group has opened more than twenty stores only for selling the apparel brands. John Miller has stepped out of Pantaloon's shadow. John miller helped Future Group in differentiating from the contemporary Retail stores.

2. Lower Pricing-Higher Sales: The Price range of John miller shirts are in the range of Rs 300-600, significantly lower than branded shirts like peter England. The private labels of future group has turnover of more than Rs 100 crores per annum. Overall, John Miller is an attractive option for value buyers. Over the years, John miller has matured as private label maturity label as shown below:

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The John Miller Brand is a perfect example of a successful private label brand.

5.0Needs, Wants and Demands catered by Private Labels:

Historically, private labels have not been too keen on innovation. Private Labels had mostly been trying to imitate national brand competitors rather than looking at consumer needs directly. The only differentiating factor would be to sell the goods at a lower price. The branded labels would then be forced to reduce their own price to survive the competition, thereby erasing the margins for themselves and for private labels alike

That’s why, it is more important for private labels to innovate and customize to stay in the market and retain margins and it is imperative for them to find out the customers needs and then create wants and desires based on those needs

Private labels are not only beneficial for retailers but are equally beneficial for the customers. Private labels cater the needs, wants and demands of the customers by making them available to customers at lower prices.

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Initial Phase- During this nascent stage, the focus was more on price rather than quality

Second Phese- This was more like a transition phase, where the focus slowly got shifted on product quality along with product price.

Maturity Pahse- Presently, John Miller is in maturity phase. The quality is of prime importance. It has grown as a Private brand from Private Label.

5.1How do Private labels bring out latent needs?

The following Strategy should be followed by the private labels for bringing out the needs:

Looking for gaps in the market that branded players cannot fill "Tesco Finest". Tesco Finest introduced the idea of ready meals and chilled foods Difficult for branded players to prepare and distribute

Exceeding the effectiveness of similar products from big brands Certainly less risky to duplicate a successful product But if the products have a definitive differentiating factor that the original lacks,

will work in their favour More and more US retails introducing products that are USDA-certified, ‘green’

and support health and wellness. Targeting wants that ideally become needs

needs are more or less rational i.e. no emotions are involved Wants are very emotional, and products and services addressing emotions will be

more successful. Ethnic Merchandizing - depending on the demographics of a store location

bringing non regional products into right ethnic catchments Subhiksha retails south Indian pickles in RK Puram at Delhi.

5.2 Needs: Needs are basic human requirements. The products like wheat, rice, sugar are the necessary for human and that’s why can be classified as needs. Retailers often find it difficult to make successful private labels in the categories where there are generic brands like Colgate or Tata Salt. Therefore, they enter in the categories like sugar, where there are no dominant brands. This is beneficial for the retailers as it shields them from the fierce competition. But it is also beneficial for the customers as private label products of same quality are available at lower prices. Consider for example, Big Bazaar sells 5 kg sugar under the brand name of Renuka, which is around 15-20 % cheaper than other 5 kg packs available in the shop. In this way, by catering the needs of the customers, private labels create a win-win situation for both customers and retailers.

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5.3 Wants: Wants are needs directed to specific objects/services that might satisfy the need. For example, television can be classified as wants as it will satisfy the need for entertainment. Private label brands have entered into the segments like Microwave ovens, TVs to cater the wants of the customers. For example, Big Bazaar has developed Koryo brand for catering the demand of the customers in the category Microwave ovens and television.

5.4 Demand: Demands are wants for specific products backed by an ability to pay. When a private label becomes highly successful, it grows from private label to private brand. The superior quality at lower price creates demand for the product. Private labels also create the demand for the product because of their lower price. For example, John Miller from Pantaloon might sound like a classy garment from Western world to untrained ears is a substitute for a big brand like Peter England, because it offers same quality at lower price. The price range of John Miller is in the range of Rs 300-600 and is affordable for the customer who may not afford Peter England. Thus, by the principle of higher quality-lower price, private labels cater the demand for the masses.

The Table below shows various private labels of big bazaar:

Product Brand NameNeed/Want/Desire

Sugar 5kg Renuka Need

Ghee 2kg Fresh n Pure

Detergent Clean Mate

Microwave ovens, TVs Koryo

Wants

Apparel John Miller Demand

6. PESTEL and SWOT Analysis of More Stores11

Hamesha Extra

About MORE:-

MORE

In 2007 the retail arm of Aditya Birla Group known as Aditya Birla Retail Limited acquired a south based

supermarket chain and ventured into the food and grocery retail sector and expanded its presence under the

brand ‘more.’ with two formats Supermarkets and Hypermarkets.

MORE Super markets: A supermarket that takes care of consumers’ everyday needs. It offers a wide range of

food and non-food items ranging from fresh fruits & vegetables, groceries, personal care, home care, general

merchandise, basic range of apparels, staples, dairy products, inner-wear, kids' essentials, pharmacy, bakery,

mobiles. Home delivery, variable mode of payment, attractive offers and discounts. It was launched in May

2007 and since then it has rolled out over 640 stores across India.

MORE Hyper markets: A hypermarket is one which can be described as a complete shopping destination

which apart from regular food and non food items also offers items like computers & accessories, mobile

phones, footwear, national & international apparel brands all under a single roof. It was launched in March

2008 and presently operates 11 stores across India.

More has adopted competitive pricing policy ensuring the best possible value for consumers. It offers a wide

variety of products below MRP and also provides attractive discounts and promotions including festival

promotions.

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More also offers membership program Clubmore which entitles members to special benefits and to receive

exclusive SMS alerts for special offers. Apart from it More Hypermarkets offer consumer finance options for

electronic goods and Gift Card facilities. Currently Clubmore has 1 million members on its loyalty program.

OWN LABELS:

     Feasters, Kitchen's Promise, Best of India, Enriche, 110%, Pestex, Paradise, Germex

AWARDS:

Reid & Taylor Award 2009 & 2011 for Retail Excellence for "RETAIL BEST EMPLOYER OF THE

YEAR"

Most Admired Retail Face of the Year 2010 awarded to Thomas Varghese, CEO ABRL...by India Retail

Forum

    KEY COMPETITORS:

Foodworld Super Markets Ltd.

Pantaloon Retail (India) Ltd.

Spencer's Retail Limited

Trent Limited

Heritage Foods (India) Limited

Future Group’s Big Bazaar

EasyDay

CORE VALUES:

Integrity

Commitment

Passion

Seamlessness

Speed

TARGET AUDIENCE:

MORE targets higher and upper middle class customers

The large and growing young working population is a preferred customer segment

Targets specifically working women and home makers who are the primary decision makers

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6.1 PESTEL Analysis of MORE:

1. Political:

FDI Policy: Opposition to Foreign Direct Investment from small traders affects retail industry.

Land allocation policies: Land-use conversion is time consuming and becoming complex.

Local politics: Local politics plays a big role in land and property acquisition.

2. Economical:

Inflation: Due to inflation the cost of production increases rapidly due increase in cost of required raw

materials, labor etc, thereby increasing cost of commodity and decreasing its demand.

Economic Growth: With a rise in GDP, the purchasing power a country’s people increases and they

tend to demand more of premium products. People are enticed to buy more quantity of a product to

avail the discounts and offers that are offered by the retail stores

Effectiveness of financial institutions: In India, the retail sector has not yet gained the ‘industry status’

which makes it difficult for retailers to acquire funds from financial institutions to finance any

improvement plans. MORE has to depend mostly on its umbrella brand for monetary support.

Efficiency of free market: In India the retail sector is open to all, hence it is fiercely competitive.

Retailers like MORE find it difficult to capture and maintain a profitable market share.

Quality of infrastructure: Due to the lack of proper infrastructure like roads, electricity, cold chains,

distribution ports and commercial property most retailers have to confine their operations mainly to the

urban and metro areas. The above constraints cause problems for expansion plans of retailers and also

increase distribution cost.

Interest Rates: A high rate of interest causes difficulty in raising capital for expansion and growth of

business since it is costly to borrow money. This may in turn slow down the growth of the venture.

Exchange Rates: The exchange rates of a country affect the cost and profit earned from exporting

goods and the demand and feasibility of importing goods.

Stability of currency: A strong currency makes it difficult to export goods as it decreases the profit in

terms of a foreign currency.

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3. Socio-Cultural Factors:

Young Consumer: India being one of the youngest countries in the world has significant presence of

youth. This offer a big opportunity for the retailers like MORE. These young people have grown up

with internet and are exposed to better living standards. Also, they start making money at an early age.

These young people who consider shopping malls and stores as a place for entertainment.

Availability of Easy Credit: Presence of credit cards and debit card has increased the purchasing

power of the customers.

Growing Urbanization: Growing urbanization is converting the people from net saver to net spenders.

Awareness level: Due to the rise of social media network tools and other mass communication tools

awareness level is increasing. Because of these tools offers and scheme of the retailers can reach the

customers very fast.

Aspiration: Due to the westernization of Indian culture, consumer behavior is changing. Like now

consumers are now more interested in fashionable products than they were 10 years ago. Also, it is

changing the aspiration value of the customers and offering an opportunity in front of the retailers to

catch the opportunity.

Unemployment: This is one of the most important factors that affects economy adversely. When there

is a high level of unemployment, the demand for many goods decreases which further decreases

demand for producing such goods, as people tend to save money and cut back on spending.

Increase in no. of working women: Because of increase in the work force of women, the families are

looking for convenience. Families prefer to shop at stores where they can get all routine things at one

place.

4. Technological Factors:

Supply Chain Management: Over the years supply chain has been strengthened by incorporating

technology. It has made possible high participation of the manufacturer and retailer in the market flow

of commodities.

Inventory Management: Advanced planning and scheduling and inventory management has been

incorporated in large retail houses to bring down inventory expenses.

Demand Forecasting: Soft wares are available for demand forecasting, merchandising and seasonality

management which if effectively used can change fortunes.

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Data Mining: There has been a great surge in data mining activities for better understanding of market

demand patterns and consumer buying behavior to arm themselves with the best offerings.

Customer Support Activities: Better customer support and grievance addressing has been possible

due to EDI (Electronic Data Interface), QR (Quick Response) and ECR (Efficient Consumer Response)

systems.

Strategy Building: Retail chains can incorporate decision making tools at various levels to build the

best strategy by collecting and collating data from various sources.

Going Online: Effective online activities can be used for building customer relations, advertisement &

promotion, customer support and brand building.

5. Environmental Factors:

Customer awareness towards environment: Customers are becoming more aware towards

environment. By demonstrating their concern towards environment, retailers can generate good will.

Environmental policies: Environmental policies are becoming more stringent than before. By

reducing the carbon emission retailers can get benefit from government.

Hygienic condition: Unhygienic conditions at store not only signify the poor maintenance by the

retailer but it also shows that retailer is not concerned about food preservation in the food starving

country.

Green Stores: By designing the stores in a sustainable way, retailers not only demonstrate their

concern for environment but also reduce the operating costs.

6. Legal Factors:

Custom Duties: Customs duties are levied on import of goods in India.

Prolonged Judicial Process: For settling property disputes, it consumes lot of time.

Rigid building laws: Rigid building laws makes procurement of retail space difficult.

NRI related Regulations: Non-residents are not allowed to own property except they are of Indian

origin.

Pro-tenancy laws: Presence of strong Pro-tenancy laws makes it difficult to evict tenants and this is

posing problems.

High stamp duties: Very high stamp duties on transfer of property affect the industry.

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6.2 SWOT Analysis of MORE:

Strengths:

High Local Reputation: MORE FOR YOU…the private label received the “Most Admired Private Label” Golden Spoon Award at Food Forum India.

Joint business plans: Joint business plans with FMCG companies helps co create value for both business instead of negotiating price. It also has direct linkages with the farmers to ensure constant supply of fresh fruits and vegetables.

Membership offers: Offers the members a membership called “Clubmore” under which they receive benefits and discounts.

High Variety Products: High Promises to be a one stop solution for everyday needs with an assortment of over 4000 products which includes a wide range of food and non-food items ranging from fresh fruits & vegetables, groceries, personal care, home care, general merchandise, basic range of apparels, staples, dairy products, inner-wear, kids' essentials, pharmacy, bakery.

Growing Private Labels: Private labels contribute to around 18% of the whole stock as compared to the 5% industry norm. This provides greater margin to the company and lower prices to the customers. This is so because the margins are 35-40% higher and prices are 5-20% less.

Country wide presence: More than 600 supermarkets all over India.

Home Delivery Services: The megastore offers free home delivery, variable mode of payment and discounts.

High Capital Reserves: Has a huge capital reserve because of the $28 billion Aditya Birla Group.

Strategic Locations: Strategically located stores to increase footfall.Operates on the basis of saturating neighborhoods with supermarkets and has taken BhartiWalmart in whichever cities they operate.

Intelligent Promotional Offers: Promotional offers on private labels shown near the entrance, thus tempting the buyer to purchase a private label as compared to another brand.

Intelligent Pricing: The pricing strategies for the private labels were decided in such a manner that the buyer could not easily compare it with the other goods.

Weakness

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High Price: Feasters, the private label owned by more, sells most of it's goods at a higher price, or in some rare cases at par, compared to the market leaders.

Examples: A one litre bottle of Feasts Mango drink is sold at Rs 45 whereas Frooti offers 1.2liters at Rs 50 500 grams of Feast's tea powder cost Rs 160, whereas the same quantity is sold by Tata Tea for

Rs 144 More's detergant is priced at par with some of the market leaders. with only Rs 2 difference

between the same quantitiesof More's 110% and Rin.For further details please refer to Annexure I.

Substandard Quality: Some of the items sold under Feast label were found to lack in quality. Secondly they were even found to be of inferior quality, especially for the price they were sold at.

Lack of Variety: In terms of either the product itself or the flavors of the product. Most of the products only seemed to be an imitation of the big players in the market. They seemed to have no differentiating factor that would make it stand apart from the rest of the players(Feedback had been collected from people who used Feast's Corn Flakes and Chatpata which is a competitor to Kurkure)

Packaging: Unlike Big Bazaar where, in addition to groceries sold in sealed packs, they are also kept in containers for customers to compare and test different qualities and then choose the one that suits them the best, More had very little option, and every product was sealed and packed in fixed quantities (mostly 1kg and 500 grams packs). The only exception to this was rice which was available for closer inspection from the customers.

Higher Operating Costs: Most of the vegetables on offer were procured not directly from the farms, but from "SabjiMandis" and thus will be priced higher.

Unavailability: Many retail outlets today offer a wide variety of exotic vegetables and fruits, and some of them sell these throughout the year. More was found lacking in this regard as they had only the basic ones on sale.

Limited Geographical Presence - eg. in entire UP, More is present only in Noida and Ghaziabad that is NCR

Opportunities:-

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Huge growth opportunity: As the current market share of the organized sector in retail is about 4% thus there is a huge opportunity available. The organized retail sector is expected to grow stronger than GDP growth in the next five years.

Growth in Tier 1-2 cities: Targeting Tier 1-2 cities to increase market penetration.

Global expansion: Presence of ABL in 125 countries gives it an opportunity to setup stores abroad.

Growing Market: The organized retail sector is expected to grow stronger than GDP growth in the next five years driven by changing lifestyles, increase in income and favorable demographic outline.

Government approval of FDI in retail sector will give it a huge boost.

Rural Retailing: Rural retailing holds a lot of future potential.

Threats:-

Intense Local Competition: Competitions from other retail giants like Big Bazaar, Reliance Fresh, etc.

High Inflation: Inflation has been on a high for a long time affecting operating costs and margins.

High Resistance from Unorganized Sectors: The unorganized sector has dominance over the organized sector in India because of low investment needs and nostalgia factor.

Complex Supply Chain Management: Supply chain for perishables, the system is too complex. Government regulations, lack of adequate infrastructure and inadequate investment are the possible bottlenecks for retail companies.

Difficulty to Raise Funds: Lack of Industry Status restricts to raise finances from banks and other financial institutions.

Complex Taxing System: Differential Tax Rates for different states.

Government Restrictions on FDI: Government Restrictions on FDI has made it difficult to raise capital and to gain access to international best practices.

High Attrition Rate: The talent pool available does not prefer the retail sector causing a high attrition rate.

Labor rules and regulation are also not followed in the organized retails. The sector is unable to employ retail staff on contract basis.

High Zonal restrictions: Lack of lands and zonal restrictions makes it difficult to find good properties.7.0 Segmentation, Targeting & Positioning-“Feasters corn Flakes”

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1. Segmentation strategy for “Feasters corn Flakes” - a MORE private brand (Private Label).

S. No. Base Type Segmentation Criteria

Explanation Segments

1 Geographic City Different tier of cities have different needs, buying patterns, culture and other differences.

Tier 1, Tier2, Tier3, Metros

2 Demographic Age Different age groups have different food requirement and eating habits.

Under 6 yrs, 6-11,12-19,22-34,35-49,50-60,60+ yrs

Family size Family size matters when choosing a particular food product based on consumption levels.

Young-single, Young-married-no children, Young-married-children, Old-single, Old-married-no children, Old-married-children

Income Different income levels have different spending capacity.

During economic crisis people tend to save money.

Low, Lower Middle, Middle, Upper Middle, High

Occupation Occupation plays an important role in choosing food products due to time constraints and timing variations of work.

Unskilled worker, Skilled worker, Petty traders, Shop owners, Businessmen, Industrialists, Self employed

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3 Psychographic Lifestyle People focusing on healthy lifestyle buy fewer calories, ready to eat food products.

Culture oriented, Sports oriented, Outdoor oriented

4 Behavioral Loyalty Status People with low or medium loyalty for national brands are more prone to switch to private labels.

None, Medium, Strong, Absolute

2. Targeting:

S. No. Base Type Segmentation Criteria

Segments Target Segment

1 Geographic City Tier 1, Tier2, Tier3, Metros

Tier 1, Tier2, Tier3

2 Demographic Age Under 6 yrs, 6-11,12-19,22-34,35-49,50-60,60+ yrs

6-11,12-19,22-34

Family size Young-single, Young-married-no children, Young-married-children, Old-single, Old-married-no children, Old-married-children

Young-single, Young-married-no children, Young-married-children

Income Low, Lower Middle, Middle, Upper Middle, High

Lower Middle, Middle

Occupation Unskilled worker, Skilled worker, Petty traders, Shop owners, Businessmen, Industrialists, Self

Skilled worker, Industrialists, Self employed

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employed

3 Psychographic Lifestyle Culture oriented, Sports oriented, Outdoor oriented

Sports oriented, Outdoor oriented

4 Behavioral Loyalty Status None, Medium, Strong, Absolute

None, Medium

Target Customers: Young people in medium income group with health conscious lifestyle, low loyalty status and white collar jobs.

3.Positioning:

Taglines used by MORE: Hamesha extra

The main positioning strategy:

Private label product

Target Customers

Benefits Value Proposition

Point of Parity

Point of Difference

Differentiation Strategy

Feasters – MORE food brand

Young people in medium income group with health conscious lifestyle, low loyalty status and white collar jobs.

Lower Price, Comparable quality

A product that provides same value to customer at lower price.

Comparable quality

Lower Price, Better Shelf Placing Strategy

Readily available on shelf, Low Price,

3.1 Positioning Statement: To young working customers in medium income group, who are conscious about their health, “Feasters corn Flakes” is a high quality widely available product at lower price. With Feasters corn Flakes, you can get best quality and healthy breakfast at lower price.

3.2 Positioning Diagram for Feasters corn Flakes:

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High Quality

Low Price High Price

Low Quality

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more.

Feasters

Kelloggs

Corn Flakes

Mohun’s

Feasters

8.0 Survey Questions and Responses:-

A total of 13 questions 5 personal details questions 7 questions on Buying Preferences and Private Labels Sample Size: 117 Surveying method: Online Form Filling Surveying Period:

First Entry – 5th Sept’11 – 22:00hrs Last Entry – 8th Sept’11 – 23:55hrs

About the Surveyees:

Gender

Male Female

Profession

Student EmployedSelf Employed HousewifeRetired

Marital Status

Married Unmarried

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Monthly Income

Less than 25,000 25,000 - 50,000 50,001 - 75,00075,001 - 100,00 More than 100,000

About their buying preferences:

While Buying FMCG products, you prefer?

National BrandsPrivate Labels

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Your frequency of purchase of Private Label Brands of

FMCG products?

Always Often Seldom Never

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Brand name is very important while buying:

You enter a supermarket (say More) & you see Britannia biscuits besides a private label (Feasters) offered at the same price. How likely are you to?

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9.0 Disadvantages of Private Labels:

The disadvantages of private labels are:

Highly competitive market.

If even a single product doesn’t live up to the expectations of the customers, then the image and brand value of the retailer as a whole goes down.

Risks of getting into a price war, thereby reducing margins even further

High inventory cost

Excessive focus on private labels inside stores

Intellectual property rights can be a issue

Excessively dependent on the supplier

10.0 Precautions

They should have large base of loyal customers before launching private labels

Strong QA and QC checks are required

The main objective should be to provide value for money products and not to target the branded products

The retailer must take into proper consideration the price-quality and willingness to pay(PQ&WP) quotient

The Indian players can study the business models of Wal-Mart and Sears to understand the nuances

11.0Conclusion

Private labels are a quite attractive proposition because they create a win-win situation for both the

customer and retailer. They offer Lower prices and higher margins and at the same time, Quality is

comparable to that of national brands. However, retailers should be cautious about not overdoing this,

especially in India where public is still new to the idea of private brands and still share much stronger

bonds with the age old marketed products. The retailers must keep in mind that private labels are not just

about price. Customer today wants the product of good quality at lower price. For developing a

successful private label product, retailers have to follow a ‘lower price-higher quality’ strategy. The

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retailers should reduce the product price only by increasing the efficiency of supply chain management

and delivery system, not by reducing the product quality. Also, the retailers shouldn’t fall into the trap of

using too many private labels. Many retailers have suffered due to this; Sainsbury is a classic example,

where the sales reduced drastically because customers didn’t find the regular brands at the stores.

Despite all the challenges, the retailers are entering into the field of private labels. The retailers like

pantaloons have already demonstrated success in the field of private labels. The rising acceptance of the

private label products among the masses unbolts a wide market of private labels in front of retailers. By

producing the good quality private brands at lower prices, retailers can capitalize on the available

opportunity.

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12.0 References:

I. Journals and Articles

1. Retail Report 2009-"Indian Retail: Time to Change Lanes" by KPMG

2. Article- “Private Labels for public good?” by K.Radhakrishnan in Business Line in January 2002

3. Journal of arts science & commerce-“Private Labels brands in food & grocery: the changing

perceptions of consumers & retailers in India- a study in the pune region” Vol.– II, Issue –1,January

2011

4. The Nielsen Company, “Nearly Three-Quarters of U.S. Consumers Agree Private Label Brands Are

Good Alternatives to Name Brands, According to Nielsen Survey,” press release issued November

17, 2008.

5. J.D. Power and Associates, “For Private Label Grocery Brands, Organic Products Drive Gain in

Prestige among Consumers,” press release issued March 25, 2009.

6. T. Hale, “If You Thought All Store Brand Buyers Were the Same—Thing Again,” Facts, Figures &

the Future, February 2009.

II. Websites

7. www.businesstoday.com

8. www.wikipedia.com

9. www.marketingpractice.com

10. SWOT analysis of Indian Retail Industry by RaminderKaur Bhatia and BaljinderKaur

11. www.morestore.com

12. www.skylinecollege.com/blog/dissertation/competitive-analysis-of-aditya-birla-retail

13. www.economywatch.com/business-and-economy/it-trends-retails-india.html

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