Last week Nielsen released this report on private label brands. Private label has been the bane of brands for as long as I can recall in the industry. But for most of that time it was a brick-and-mortar issue as retailers would put much cheaper, yet more profitable, knock-offs right next to your brand. In many categories I have worked in private label held the largest or second largest share. Now that purchasing behavior is shifting to ecommerce private label is following.
So how does a brand avoid falling into the trap of investing in equity building via advertising only to have someone grab the knock-off brand right next to it at shelf or online? Simply put, by using the vast research at our disposal we can build a target audience of people who prefer brand name products.
All people within a demographic or a category user base are not equal. Some are more valuable than others. You can’t look only at heavy users because in many categories the heaviest users are the most likely buyers of private label. MRI has psychographic data on people’s purchasing habits. There are people who prefer brand name items and won’t purchase private label/store brands. You cannot use a demographic surrogate because this is a personal mindset issue that defies most demographic definitions. Wealthy people are as inclined to buy private label, so it’s not socioeconomics. Here’s an example of 10 cable networks who have a significant skew to those who prefer private label items, according to MRI:
These cable networks frequently appear on buys for marketers whos sole metric for deciding which networks to buy is demographic CPM. I often say the cheapest media can be the most expensive if it doesn’t work. Advertising on these networks might remind someone who has an empty box of cereal/laundry detergent/cold medicine to repurchase. But your spending to remind them only gets them to buy the private label more often than your branded item. How does your brand benefit?
Of course, no one is one-dimensional. Someone may be inclined to buy private label in one category, but not another. This data is easily pulled by your agency and incorporated into your plan. But are they? Do you ask your media agency to look at factors like this? More importantly, do they look themselves if you don’t ask?