engleski

Private label management during economic crisis

Private labels can be defined as brands which are owned by intermediaries who employ producers to produce the products which will be sold under that brand or to whom will the brand be assigned to. Until recently, private labels were considered to be a phenomenon limited to fast moving consumer goods in mature markets of economically developed countries, characterised by high number of products and therefore high substitution rates. However, analysis of data on value shares and private label growth rates on the global level indicates that this is no longer the case. According to ACNielsen 2005 report, private labels have held market share of 17 per cent on the global level with annual growth rate of 5 per cent. According to the latest GFK report, share of private labels in Croatian households has increased from 10.1 per cent in January-October 2007 to 11.7 per cent in the same period of 2008 in all analysed categories, except the beverage category where their share remained constant. Growth of private labels is, according to Keller, result of clever brand management strategy. With regard to building brand value, the key differentiation point for private labels is that they represent „good value“ in the eyes of consumers, what is a desirable characteristic especially during the time of economic crisis when customers are extra careful when selecting products or brands. However, despite the anticipated increase of private labels market share due to economic crisis, retailers must not expect that the economic conditions will do all the work for them. It is very important for the retailers to realize the opportunity which lies in front of them and direct their efforts in appropriate private label management strategies. Goal of this paper is to provide overview of private label management strategies during the time of economic downturn through implementation of portfolio segmentation based on price.

private label management, economic crisis

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