June 18, 2007
PLBuyer: Building Brands
By Jill Rivkin
Through a special arrangement, what follows is an excerpt of a current article from Private Label Buyer, presented here for discussion.
Ahold USA’s banners are finding that their premium private labels Nature’s Promise and Simply Enjoy are creating true differentiation.
The two premium brands, which complement established and strong national-brand-equivalent banner brands, plus a value line called Guaranteed Value, have helped upgrade each banner’s image and made them known for more than just low prices.
“Giant of Carlisle stands for quality, selection and low prices, and a robust corporate brands program has been a key part of getting that message to consumers,” says Stephen Vowles, senior vice president of marketing for Ahold USA. “Stop & Shop and Giant of Landover have stood for quality, strong variety and good sale prices. We really want to move to a more differentiated place than that, and we’d like to move forward our offering so that we help make consumers’ lives and shopping a little simpler. We’d like to differentiate ourselves as a supermarket that way, and at the same time, stand for low prices. Traditionally we stood for great sale prices, but we want our customers over the next few years to know there are always good prices.”
Simply Enjoy – offering “everyday, affordable indulgences” around frozen entrees, appetizers and desserts – was launched only six months ago and has expanded to 160 products across 20 categories. Nature’s Promise, Ahold’s first success in premium launched in 2004, has expanded to more than 160 products, thanks to a high level of consumer acceptance in the meat, deli and produce departments.
Much of the success of the initial launch of Nature’s Promise was attributed to the commitment of operating companies embracing the program and driving sales with ads and displays. Packaging and in-store messaging enabled clean and clear comparisons for consumers making decisions, as most of them do. Also, the “wallet-friendly organics” line was sold in both its natural/organic sets as well as mainstream category sets.
“This gives us a lot more awareness with the customer and the chance to reach natural and organic consumers, as well as the opportunity to meet mainstream consumers who may trade up to Nature’s Promise,” says Rich Ryan, senior director of product development for Ahold USA.
Ahold USA’s corporate brands team is sure to promote the strong foundation established with the national-brand-equivalent lineup – a true store brand carrying the company’s banners (i.e., Stop & Shop, Giant). “Though it’s less headline-grabbing, it is a very, very strong program,” says Mr. Vowles. “It has come a long way over the past few years, and it is the backbone of a program in terms of volume…We can only do Nature’s Promise and Simply Enjoy because we’ve got the basics set.”
The success of Nature’s Promise and Simply Enjoy have catapulted Ahold’s private label program, both internally and customers.
“They show what can be done,” Mr. Vowles says. “Those kinds of successes put us in a positive spiral with our customers. Customers are buying Nature’s Promise and finding it to be a good experience. That comes back around to help with the national brand equivalent. They realize that we are delivering something that they can believe is as good as a brand. If you give them those positive experiences, it really helps the program rise up.”
Discussion Questions: What do you make of the success of Ahold USA’s premium private label programs in upgrading the image of their banners? What can other retailer’s learn from Ahold USA’s success? What are some key differences to building a premium private label program that might differ from a NBE (National-Brand-Equivalent) program?
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What Ahold has done is move the needle on traditional private label thinking. What was once enough at having skus be “National Brand Equivalents” has now evolved into becoming the brand themselves and the destination category…not the best alternative. Bravo to David Biernbaum’s comments–he hit the nail on the head.
Successful brand building in PL goods is complicated by the fact that the label usually broadly covers items ranging from salad dressings to premade hors d’oevres to cookies to pasta to–you name it. The products are not all made by the same manufacturers so some items in the PL line always seem to be better than others. I’ll use President’s Choice as an example here. Some products are absolutely great; others have been disappointing. With a PL brand one disappointment can undo lots of work and previous good will to that brand, or prevent further consumer experimentation with the brand. And this is a risk each time a new item is introduced.
David Biernbaum lays out a very good prescription for brand building–and that’s the critical cultural ingredient to premium private label–it is BRAND building. No different than building any other brand. And the greatest among equals in his 10 point plan is point 5–innovation. Constant, consistent, relevant innovation is the key to brand success. Only innovation can provide the critical ingredient to brand building, and that’s meaningful differentiation. Doesn’t matter if you are Publix or Procter–same rules apply for one simple reason. The consumer cares very little what the name of your company is.
Private Label is making a huge comeback, but not because it is a cheap alternative to National Brands. PL is filling niches that National Brands cannot address. Specialty items in the organic and nutritional areas are of great interest in some parts of the USA, but not great (right now) in other areas. Those serving large population areas and/or the Northwest have seen very good growth in interest in natural, organic, humane treatment certification, and other far flung interests. An astute grocer has the ability to address these needs for packaged product via PL. Often, the differences from region to region are too great for a National Manufacturer to address. This PL opportunity allows the grocer to create a product that carries a premium price and premium profit. If marketed correctly these “new” products allow the grocer to attach their current PL offerings to the new products which should create increased consumer interest in PL in general. Grocers should be very careful to insure that the consumer is getting quality product. Disappointing the consumer in today’s environment is a sure fire route to bankruptcy.
It appears that they’ve been successful by doing everything right from the get-go: develop products/lines based on consumer wants and needs, price, place and package to stand apart and then support the new lines across all channels consistently.
I agree with Gene that this kind of concentrated, cohesive internal effort will indeed put pressure on CPGs. Not only are these private label lines giving them a run for their money, they’re also serving as an example for how to go to market quickly and effectively. I think the competition is a good thing, as it will keep all parties on their toes and more focused on serving–and responding to–consumer needs as they continue to evolve.
The upgrading of private label products to the premium level has been evolving for some time via insightful food retailers including Ahold. This process shows promise of continuing onward, which will put increased innovative demands on national CPG companies.
The art of teaching consumers about one’s premium-level private labels within one’s privately-control shopping environment is the art of assisting discovery, which relates to consumers acknowledging higher quality, better taste or more psychic enhancement via the purchase of those premium-level products. Once such a discovery is made, new roads open up for consumers wishing better products and more appealing store-prepared services from private labels. And consumers are responding today in growing numbers and creating a sales flow. And Ahold has joined the “new marketers” within the rank of retailers.
Nature’s Promise products are successful because they answer a consumer need for quality products at reasonable prices. The visibility of these natural and organic products has been built over the years using favorable placement in the stores, regular sale and ad features, TV, and consumer friendly labeling. The use of icons flagging health attributes such as heart healthy, fat free as well as gluten free, no lactose or vegan have added appeal along with a toll free consumer hotline.
Simply Enjoy products expand the line of offerings and feature more indulgent choices for consumers and a growing variety of products. They taste delicious and have very distinctive packaging.
These additions to the corporate brand program create a true differentiating reason to shop Ahold banner stores.
With any brand that you introduce to the marketplace, the need to communicate why it is different (and price is never the differential factor) is paramount!
Just showing store level activity or price ads with and without the national brand isn’t enough. One reason is that the retailer tends to price equal to or above the national brand.
And as always, the retailer must convince, if not stimulate the consumer’s mind on the superior, premium retailer’s brand.
Hmmmmmmmmm
Best practices for private label premium brand marketing:
1. The brand must function as a brand that sustains the company’s or store’s image. Store brands should be viewed as far more than margin boosters, and should serve as reinstatement of the store identification itself. It’s important to note that true value-oriented brands build customer loyalty far beyond economic downturns or recoveries. The quality of the merchandise itself should be communicated effectively, not understated, nor overstated!
2. Top management must be totally committed to support the brand’s strategy. Private label branding should not be a function of individual buyers within a category that are autonomous from each other. Top management should team up with marketing skilled people, inside and outside of the retailer infrastructure. Branding needs to be broader than any individual item or single-category within the store.
3. Create your store brand cohesively. It’s not usually a good practice to blatantly imitate other brands, at least not if your purpose is to build brand equity in your own store brand or company name. Don’t create category stand-alone’s that ignore the need to achieve cohesive brand franchise.
4. Define the company’s or store’s point of difference. Retailers need to know and understand their target consumers and store brands should reflect the store-branding philosophy, and also the image of the store, itself.
5. Be unique to generate curiosity. Invest in innovation to keep on the leading edge and continue to build brand equity. Refrain from “look-alike” marketing. Doing so will only breed confusion and fail to build brand equity. You need to build consumer confidence of “equal or better.”
6. Design and implement the brand packages constantly. Always be aware of quality-perception across an array of products and packages. Analyze each category probing how best to present the products to the consumer, and avoid the rubber-stamp approach. You want an overall consistent look that consolidates store brand imaging. The consumer visualizes the product though packages, shapes, colors, symbols, words, and then forms an opinion about value and performance. Every detail in your marketing, merchandising and planning needs to be thought out carefully and purposely.
7. Position the brand to function effectively in each product category. Most effective are your niche designs. Retain your stylistic relationship to the overall private brand program.
8. Reflect the price and quality and value strategy of the store. Resist the temptation to make packages as tempting as possible. That mistake will always backfire. Glamorizing to the extreme will cost you consumer-credibility. Your products should not look cheap or inferior, but they should also not try to oversell. They must fulfill the right promise or they will not be purchased again.
9. Renew excitement with each new product line. New products deserve attention and fanfare. Retailers own the shelves and the ability to crate and stimulate interest in their own brands. Use media advertising, packaging, ads, promotions, shelf displays, points of purchase, displays, and signs to create the right attention to your new products within in your brand.
10. Monitor your brands constantly. Monitor packages that represent the store brand and use data to analyze consumer shopping habits and performance. Never become complacent. You should look at making modifications and changes about once every 18 months or so. Keep it fresh.
How is success defined? Is the premium private label program successful just because they say it’s so? The Premium Private Label program seems to be a direct assault on Value brands, and most of the time (not always) Value brands outsell the Premium PVL (or Store Brand) equivalent. We’ve conducted research in dozens of categories, and the consumer feedback is always the same: there is a core percentage of value-conscious consumers (30% or more except in rare instances as low as 15%) that don’t buy private label and never will. So if the strategy is to crowd out value brands at the expense of premium PVL, that is a losing strategy.
I think Ahold has done a fabulous job with both Simply Enjoy and Nature’s Promise. The biggest compliment is they don’t appear to be private label. The first time I saw Simply Enjoy I didn’t know it was an Ahold private label and was struck by the simplicity of the brand. It was simple but refined. It seems to resonate with today’s hurried shoppers and I believe it will continue to be successful for them. Along with Nature’s Promise they’ve done a terrific job of packaging and the in-store communication has hit the mark.
Yes, the upscale private label brand evolution/revolution has been happening for more than 15 years. A&P pioneered this concept with its Master Choice line of fine, high quality food products at affordable prices.
Today other retailers like Ahold and Safeway have refined it further to comprise lines offering organics and other niche foods.
The success of this gourmet line of private branded foods does afford the customer quality, selection and value. The label has to stand out. Think of the shelf recognition Ann Page offered customers until the mid 1980s. A simple bright red square with white lettering identifying Ann Page. A nice logo below identifying the product, maybe some recipes on the side of the packaging and the Good Housekeeping Seal of Approval symbol. This was all shoppers required and expected. This sold the product to the customer. When they reached for these products on their grocer’s shelves, they routinely recognized the consistent quality of the products they were purchasing.
Value brands and generics put a flawed image on private label brands. The consumer definitely got/deserved what they paid for.
But today high end private brands are making a resurgence to all things private label. What supermarkets need to remember is that a certain number of its customers will never buy private labels, no matter how appealing the packaging and the pricing are. Sorry to say, that’s their loss.
But to the customers who enjoy high quality and value, those shoppers will be delighted with the selection, and will become as loyal to these product as were those shoppers who consistently relied on Ann Page products decades ago.
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What Ahold has done is move the needle on traditional private label thinking. What was once enough at having skus be “National Brand Equivalents” has now evolved into becoming the brand themselves and the destination category…not the best alternative. Bravo to David Biernbaum’s comments–he hit the nail on the head.
Successful brand building in PL goods is complicated by the fact that the label usually broadly covers items ranging from salad dressings to premade hors d’oevres to cookies to pasta to–you name it. The products are not all made by the same manufacturers so some items in the PL line always seem to be better than others. I’ll use President’s Choice as an example here. Some products are absolutely great; others have been disappointing. With a PL brand one disappointment can undo lots of work and previous good will to that brand, or prevent further consumer experimentation with the brand. And this is a risk each time a new item is introduced.
David Biernbaum lays out a very good prescription for brand building–and that’s the critical cultural ingredient to premium private label–it is BRAND building. No different than building any other brand. And the greatest among equals in his 10 point plan is point 5–innovation. Constant, consistent, relevant innovation is the key to brand success. Only innovation can provide the critical ingredient to brand building, and that’s meaningful differentiation. Doesn’t matter if you are Publix or Procter–same rules apply for one simple reason. The consumer cares very little what the name of your company is.
Private Label is making a huge comeback, but not because it is a cheap alternative to National Brands. PL is filling niches that National Brands cannot address. Specialty items in the organic and nutritional areas are of great interest in some parts of the USA, but not great (right now) in other areas. Those serving large population areas and/or the Northwest have seen very good growth in interest in natural, organic, humane treatment certification, and other far flung interests. An astute grocer has the ability to address these needs for packaged product via PL. Often, the differences from region to region are too great for a National Manufacturer to address. This PL opportunity allows the grocer to create a product that carries a premium price and premium profit. If marketed correctly these “new” products allow the grocer to attach their current PL offerings to the new products which should create increased consumer interest in PL in general. Grocers should be very careful to insure that the consumer is getting quality product. Disappointing the consumer in today’s environment is a sure fire route to bankruptcy.
It appears that they’ve been successful by doing everything right from the get-go: develop products/lines based on consumer wants and needs, price, place and package to stand apart and then support the new lines across all channels consistently.
I agree with Gene that this kind of concentrated, cohesive internal effort will indeed put pressure on CPGs. Not only are these private label lines giving them a run for their money, they’re also serving as an example for how to go to market quickly and effectively. I think the competition is a good thing, as it will keep all parties on their toes and more focused on serving–and responding to–consumer needs as they continue to evolve.
The upgrading of private label products to the premium level has been evolving for some time via insightful food retailers including Ahold. This process shows promise of continuing onward, which will put increased innovative demands on national CPG companies.
The art of teaching consumers about one’s premium-level private labels within one’s privately-control shopping environment is the art of assisting discovery, which relates to consumers acknowledging higher quality, better taste or more psychic enhancement via the purchase of those premium-level products. Once such a discovery is made, new roads open up for consumers wishing better products and more appealing store-prepared services from private labels. And consumers are responding today in growing numbers and creating a sales flow. And Ahold has joined the “new marketers” within the rank of retailers.
Nature’s Promise products are successful because they answer a consumer need for quality products at reasonable prices. The visibility of these natural and organic products has been built over the years using favorable placement in the stores, regular sale and ad features, TV, and consumer friendly labeling. The use of icons flagging health attributes such as heart healthy, fat free as well as gluten free, no lactose or vegan have added appeal along with a toll free consumer hotline.
Simply Enjoy products expand the line of offerings and feature more indulgent choices for consumers and a growing variety of products. They taste delicious and have very distinctive packaging.
These additions to the corporate brand program create a true differentiating reason to shop Ahold banner stores.
With any brand that you introduce to the marketplace, the need to communicate why it is different (and price is never the differential factor) is paramount!
Just showing store level activity or price ads with and without the national brand isn’t enough. One reason is that the retailer tends to price equal to or above the national brand.
And as always, the retailer must convince, if not stimulate the consumer’s mind on the superior, premium retailer’s brand.
Hmmmmmmmmm
Best practices for private label premium brand marketing:
1. The brand must function as a brand that sustains the company’s or store’s image. Store brands should be viewed as far more than margin boosters, and should serve as reinstatement of the store identification itself. It’s important to note that true value-oriented brands build customer loyalty far beyond economic downturns or recoveries. The quality of the merchandise itself should be communicated effectively, not understated, nor overstated!
2. Top management must be totally committed to support the brand’s strategy. Private label branding should not be a function of individual buyers within a category that are autonomous from each other. Top management should team up with marketing skilled people, inside and outside of the retailer infrastructure. Branding needs to be broader than any individual item or single-category within the store.
3. Create your store brand cohesively. It’s not usually a good practice to blatantly imitate other brands, at least not if your purpose is to build brand equity in your own store brand or company name. Don’t create category stand-alone’s that ignore the need to achieve cohesive brand franchise.
4. Define the company’s or store’s point of difference. Retailers need to know and understand their target consumers and store brands should reflect the store-branding philosophy, and also the image of the store, itself.
5. Be unique to generate curiosity. Invest in innovation to keep on the leading edge and continue to build brand equity. Refrain from “look-alike” marketing. Doing so will only breed confusion and fail to build brand equity. You need to build consumer confidence of “equal or better.”
6. Design and implement the brand packages constantly. Always be aware of quality-perception across an array of products and packages. Analyze each category probing how best to present the products to the consumer, and avoid the rubber-stamp approach. You want an overall consistent look that consolidates store brand imaging. The consumer visualizes the product though packages, shapes, colors, symbols, words, and then forms an opinion about value and performance. Every detail in your marketing, merchandising and planning needs to be thought out carefully and purposely.
7. Position the brand to function effectively in each product category. Most effective are your niche designs. Retain your stylistic relationship to the overall private brand program.
8. Reflect the price and quality and value strategy of the store. Resist the temptation to make packages as tempting as possible. That mistake will always backfire. Glamorizing to the extreme will cost you consumer-credibility. Your products should not look cheap or inferior, but they should also not try to oversell. They must fulfill the right promise or they will not be purchased again.
9. Renew excitement with each new product line. New products deserve attention and fanfare. Retailers own the shelves and the ability to crate and stimulate interest in their own brands. Use media advertising, packaging, ads, promotions, shelf displays, points of purchase, displays, and signs to create the right attention to your new products within in your brand.
10. Monitor your brands constantly. Monitor packages that represent the store brand and use data to analyze consumer shopping habits and performance. Never become complacent. You should look at making modifications and changes about once every 18 months or so. Keep it fresh.
How is success defined? Is the premium private label program successful just because they say it’s so? The Premium Private Label program seems to be a direct assault on Value brands, and most of the time (not always) Value brands outsell the Premium PVL (or Store Brand) equivalent. We’ve conducted research in dozens of categories, and the consumer feedback is always the same: there is a core percentage of value-conscious consumers (30% or more except in rare instances as low as 15%) that don’t buy private label and never will. So if the strategy is to crowd out value brands at the expense of premium PVL, that is a losing strategy.
I think Ahold has done a fabulous job with both Simply Enjoy and Nature’s Promise. The biggest compliment is they don’t appear to be private label. The first time I saw Simply Enjoy I didn’t know it was an Ahold private label and was struck by the simplicity of the brand. It was simple but refined. It seems to resonate with today’s hurried shoppers and I believe it will continue to be successful for them. Along with Nature’s Promise they’ve done a terrific job of packaging and the in-store communication has hit the mark.
Yes, the upscale private label brand evolution/revolution has been happening for more than 15 years. A&P pioneered this concept with its Master Choice line of fine, high quality food products at affordable prices.
Today other retailers like Ahold and Safeway have refined it further to comprise lines offering organics and other niche foods.
The success of this gourmet line of private branded foods does afford the customer quality, selection and value. The label has to stand out. Think of the shelf recognition Ann Page offered customers until the mid 1980s. A simple bright red square with white lettering identifying Ann Page. A nice logo below identifying the product, maybe some recipes on the side of the packaging and the Good Housekeeping Seal of Approval symbol. This was all shoppers required and expected. This sold the product to the customer. When they reached for these products on their grocer’s shelves, they routinely recognized the consistent quality of the products they were purchasing.
Value brands and generics put a flawed image on private label brands. The consumer definitely got/deserved what they paid for.
But today high end private brands are making a resurgence to all things private label. What supermarkets need to remember is that a certain number of its customers will never buy private labels, no matter how appealing the packaging and the pricing are. Sorry to say, that’s their loss.
But to the customers who enjoy high quality and value, those shoppers will be delighted with the selection, and will become as loyal to these product as were those shoppers who consistently relied on Ann Page products decades ago.