Market Like A National Brand

We have gone through the evolution of growth for private brands as it relates to quality, packaging, SKU optimization and tier expansion. The next step is to market like a national brand. Opportunities now exist for store brands in direct mail, FSIs, shared mail and other traditional marketing platforms typically used only by the national brands.

Today's consumers are savvier than ever, and many of them are switching back and forth between store brands and national brands. At the outset of any discussion about store brands and national brands, it is necessary to place consumers into one of three groups:

• Those who purchase national brands exclusively.
• Those who purchase store brand products exclusively.
• Those who switch back and forth between national brands and private labels.

Marketers of store brand products should focus their efforts on the last group, the "switchers," because these consumers' shopping behavior most likely can be changed. In the digital age, the most effective way to identify these consumers is through a comprehensive segmentation system that allows a comparison based on many variables and data sources. Retailers then can place consumers into distinct groups with predictable behaviors.

In addition, you must always keep in mind the importance of location. National brands need to relate to many different types of consumers and retailers, but they have to keep their identity the same. Private brands, on the other hand, have a closer alignment between the retailer and the consumer. Retailers can exploit this advantage with a very focused consumer profile and strategy based on the areas in which their private brand products are sold.

First, you need to know where to allocate resources for the greatest return on investment. To do that, you need to rank each store for potential.

The figure on the bottom left of the page shows four quadrants, each representing a different type of retail store. Buxton Co. ranked each store by the number of private brand consumers in the trade area and how close they are to the store. After tabulating the data, we put each store into one of the following four quadrants:

Optimize — These stores have an equally low potential for private brands and national brands. The stores should be supported, but they should not take resources away from other stores with greater potential.

Plan — These stores have a high potential for national brands, but a low potential for store brands. This is where the national brand loyalists live, and private brands probably will not have immediate potential in these stores.

Compete — These stores have a high potential for both national brands and private brands. They have a big potential return for store brand sales, but they also are going to be very highly contested.

Grow — These stores have many consumers who enjoy purchasing store brands, and the potential for national brands is relatively low. This quadrant represents the area where private brands can nurture the relationship with repeat customers by offering a superior product experience and perhaps even rewards for store brand loyalty.

The data could be used to rank not only stores, but also households, ZIP codes, carrier routes and other essential marketing geographies. The goal is to target-market to the lowest number of people with the highest potential for return on investment,

Bill Bradshaw is vice president of sales at Buxton Co., a Fort Worth, Texas-based provider of market planning and marketing services. He may be reached at [email protected].