Savvy Private-Label: Bigger Foe of National Brands

In the past, the best a private-label brand could hope for was to be on par with national brands. However, a new level of sophistication is emerging, and packaging plays a key role. So at their best today, private-label brands are in some cases the category leader. Here are three tactics private-label marketers use to be more competitive.1. They study category dynamics and respond with packaging. Retail brand managers get the message that one size does not fit all. They have learned that what works in health and beauty aids doesn't work for breakfast cereal or canned goods, for example.I had a recent conversation with two managers at Daymon Worldwide, Stamford, Conn. This market consultant firm, which creates a lot of private-label packaging, elaborated on the emerging "category strategy."The breakfast cereal category is one example of this approach. National marketers sell cereal with special promotions. Kid's cereals feature graphics emblazoned with cartoon characters or movie heroes, for instance. Competing in the category creates a new private-label strategy, suggests Todd Maute, vp marketing of Daymon Worldwide Design, a division of Daymon Worldwide."For today's demanding consumer, it's becoming harder and harder to create a retail brand strategy that can encompass the entire store or category like you could in the past," Maute explains. "Even more so in the breakfast cereals category. Today you need unique packaging by item, by flavor, and by consumer target."The result is that some private-label cereals packaging just hints at the connection to the store and instead emphasizes cartoon and licensed characters to parallel the national brand approach.Over-the-counter drugs present an entirely different dynamic."The driving force in this category is mom's attitude in looking for an OTC medication," says Andy Johnson, creative director for Daymon Worldwide. "She is thinking, 'I've got to make my kids or husband feel better.' Trust is a big issue." That translates into a category-wide packaging design strategy. Package design needs to communicate an assurance that the product will work well and build credibility with consumers. Walgreens' private-label drugs clearly illustrate how packaging accomplishes that. First, packages carry the tag line, "The Brand America Trusts." In addition, the design closely emulates national brands, with colors and typography as close as possible to the national brand's without infringing on trade dress. The approach lets some of the trust built by national brands "rub off" on the retailer's entries in the category.2. Retailers make premium products part of a private-label strategy. Premium brands -- and the retailers who sell them -- are growing faster than the economy in general. In some cases, the premium private-label brands are the fastest-growing in a category. Those brands have their own set of ground rules for success. Here are two key points. Packaging for premium private-label does not target a national brand. The objective is not to "look as good as" a specific national brand, but to create a perception of a top-quality brand unique to a retailer.A corollary to the previous point is that the product itself has to be premium. Packaging cannot add premium attributes to an average product. However, a premium product can be undervalued without the proper packaging. "When you have a premium line, you have to have graphics and imagery that stand head and shoulders above other packaging in the category," says Johnson. Costco's Kirkland Signature brand does that as well as any brand. The pouch for Kirkland Signature Four-Cheese Ravioli recently won an award from the Flexible Packaging Association (my insight on the package comes from my having been on the judging panel). This packaging goes far beyond the least-cost approach in the frozen food category -- the surface-printed poly bag. Instead, the Costco pouch uses a multilayer laminate to support a quality image.The film adds stiffness to the package. That translates to a good display in upright freezers and allows the stand-up pouch to hold its shape.Furthermore, the laminated film permits "locked in" printing between the film layers. That results in shine, gloss and high-quality graphics.The bag's zipper adds value by enabling consumers to remove a serving from the four-pound bag and then reclose it, assuring freshness for additional servings.3. Retailers use private-label to support their market position.Trader Joe's -- the eclectic 200-store grocery chain with retail staff decked out in Hawaiian shirts -- builds a niche with its private-label brands. It uses packaging to add the Trader Joe's touch.Consider the chain's canned soup: The challenge is to add the retailer's eclectic positioning to one of the oldest packaging formats on supermarket shelves. The answer is a can shaped like a soup crock. It supports the store's image and enhances the product by building a visual association of shape and product.It adds two packaging features to lift the product, and the brand, above the ordinary: It uses lithography directly on the can surface for decoration. The can has an easy-open end, a consumer-friendly feature that is beginning to spread in the U.S. soup market. (Although U.S. can manufacturers have worked with shaped cans, Trader Joe's imports this product from Germany.)Jim Peters is a writer and consultant with 25 years in the packaging field. He is president of J. Peters Associates Inc. Click here for his contact information.

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