How to create your own brand in the DIY segment. Development of private label (private label) for retailers We get that private labels

Private labels, or Private Labels, retail chains- a topic as interesting as it is little touched upon in our country. With significant prospects in this area, it is rare to find the effective use of all the possibilities of private labels. However, the reasons are clear and fairly standard. This is a lack of knowledge and a desire to think and learn, which is typical of marketers, general managers, and the owners themselves in particular. Otherwise, there would be no stupid experiments with private labels in areas where it is contraindicated. And, of course, the number of private labels in the "correct" categories would have to grow.

We have already written about private labels more than once. But since our concepts do not stand still, but develop, concretizing additions appear, which, as one would like to believe, will help those specialists who still think about efficient use brand capital and the development of such a direction of brand monetization as the creation of private labels.

Strategies for creating private labels

1. Dumping strategy

This is the simplest solution that does not require special analytics. Any product can be replaced by a cheaper analogue, if the economy of the process allows. There will always be a consumer who wants everything the same, only cheaper. However, calling a private label of the cheapest products by the name that is associated with the distribution network itself makes sense only in the case of promotion of discounters. In other cases, this may not be worth doing. Especially if you intend to exploit the potential of other private label strategies that are not cheap. Well, as a "fool protection" the obvious should be said: the product itself should not be frankly of low quality. Cheapness is cheapness, but the consumer still has to eat, drink or use it in some other way. And if he is very dissatisfied with the product, then at least he will stop buying it.

2. Competitor replacement strategy.

This option also does not rest on the brand of the retail chain itself, but uses the features of consumer choice. There are such product categories where the consumer has developed a certain habit of specific products and brands. Different product categories have different strength of this habit and the degree of its influence on the choice. The essence of the substitution strategy is to physically replace the leading product in the category where this consumer habit is not an important choice. We can say that these are the categories in which the brand factor is not important in part or in full. In the case of this category, the leading product is physically removed from the shelves or moved to a less successful shelf, and its place is taken by a completely similar product under a private label. At the same time, the entire “brand markup” falls into the pocket of the retailer – the product itself is no longer the cheapest in the category, but may well be even above average. At the same time, the cost of its advertising tends to zero. The option looks advantageous, but here the most difficult is the mechanism for the correct choice of a product category in which it is permissible to carry out such manipulations without a negative response from the mass consumer.

In order to understand this issue, you first need to understand which of the categories are branded (that is, those where you should not count on luck without a strong brand). In our opinion, the area of ​​greatest branding relevance is:

A) goods with unique (and tangible) consumer properties;

B) conspicuous consumption goods;

C) goods of hedonic consumption.

The first category is products whose differences from analogues are seriously noticeable. This is primarily true for products of a rather narrow, niche purpose: kefir to strengthen immunity, washing powder for black clothes, medicinal products. mineral water and etc.

The second category is the so-called. image products that participate in the process of interaction with other people. In such cases, by the level of consumption, others can evaluate the consumer, which is extremely important for a person: in order not to lose his reputation, the consumer is ready to incur additional expenses. This category includes, for example, vodka and beer. In such categories, brand loyalty is very high, and the consumer may even refuse to consume if he does not have enough choice.

The third category is products consumed for one's own pleasure, not essential for daily activities. This is alcohol (except vodka), confectionery, delicacies. In the indicated categories, the factor of brand loyalty is also quite large, the consumer may feel serious dissatisfaction in the absence of favorite brands on sale. Therefore, the substitution strategy in these categories cannot work and is even harmful. But there remains one more category where the substitution strategy works with a bang. These are utility products.

Utility products are goods of a familiar and understandable purpose, consumed due to a conscious need. This is almost all groceries (except exotic), bakery products, freezing, preservation, etc. In this category, branding in the sense that we put into it (advisory office "Tamberg & Badyin") is practically impossible. There is no need for a complex ideology of consumption and adjustment to secret motives. Consumer choice is quite primitive, and loyalty to existing brands is low. The consumer can quite easily switch to an analogue if the level of perceived quality seems similar to him, and even more so - higher. Therefore, the leaders in these product categories can either be removed from the assortment altogether, or “move” with the help of similar products. In this case, you should already use the chain's trademark itself, since a recognizable name increases the level of perceived quality. However, do not forget that the “quality” bought by the consumer, although it is a very subjective concept, still implies the quality of workmanship as well. Therefore, if you are replacing a leading product with your own brand, the quality of the product should be at least as good.

3. Brand expansion strategy.

This is the most interesting option, as it implies a real synergy between the network brand and private trademark. The brand of the network will work for the sales of its own brand, and the private label will strengthen the brand of the network. Characteristically, over time, this private label can go beyond the retail network itself and become a real brand of the local or federal level, further promoting the brand of the retail chain. Sounds nice? However, this option is also the most complex, with its own rather confusing logic. Therefore, in order to successfully apply it, you will have to seriously delve into the motives of the consumer and in your own brand of the network.

The issue is complicated by the fact that the management of every self-respecting retail chain is convinced that they definitely have a brand. Alas, this is a standard error that we, as consultants, encounter very often. Every manager or marketer calls his brand a "brand", while no one can formulate what it is. Do not flatter yourself with hopes: if you do not know why the consumer chooses your network, then you do not know what your brand is and whether it exists at all. We will assume that if the network is still alive and successfully developing, then there is still some kind of brand. It is only necessary to formulate its ideology from the point of view of the consumer and already act further on the basis of it.

Brand ideology

Brand ideology is a clearly formalized idea of ​​why a consumer needs a product under a particular brand (a supermarket or chain is also a market product), why this consumer should want to purchase this product and who this consumer is. Most likely, the brand of the network does not have such a fairly clear ideology, however, it is never too late to formulate it, which, in general, is not difficult to do. For our tasks of choosing categories for creating our own brand, such a block of brand ideology as needs is the most relevant.

According to our scheme, needs are a situational model, a role model and a cultural factor. A situational model is an integral, averaged model of the situation in the life of the consumer, for the successful solution of problems within which the brand is intended. In other words, "What is it for?" Each retail format also has its own situational models (we described this principle in more detail in the book Branding in Retail. Full cycle creation from scratch). Let's say a convenience store relies on the situational "daily meals" model, and a hypermarket already relies on the "household" model. For something the visitor chooses this network. This needs to be marked.

The next term is the role model. This is a reference image inherent in a person of a certain type and includes a set of behavioral characteristics. Every self-respecting brand must comply with a clear stereotype in the mind of the consumer “who is it for?” For what type of person? For a poor Housewife, a Mother with many children, or for a successful Careerist?

Trying to work with all consumers en masse is no longer just a mistake, but downright bad form in marketing. However, let's not talk about the obvious. In any case, a collective image, a portrait of the target consumer is necessary at least for the competent use of the relevant persons in advertising. So finding it is not a superfluous question.

The third term is the cultural factor, which consists in determining “what cultural group” the brand is intended for. What cultural group does the consumer belong to? This is probably the most difficult question. In this case, the cultural factor will have to be collected from various cubes - urban culture, territorial culture, ethnic culture, etc. (more detailed information on the topic - on the site newbranding.ru). However, it is desirable to do so. When the cultures of the brand and the consumer coincide, the consumer begins to consider this brand as “their own”, which inevitably affects loyalty. If there is a department of kosher products in the trading network, then the adherents of Judaism will consider this network “their own”, or if this network has a department of products from Japan, for example, then it will be “their own” for another cultural group. It must be understood that cultures can be antagonistic, and their adherents can be in direct confrontation with each other. Therefore, it is not possible to accommodate the specific needs of all cultural groups. It is necessary to formulate the cultural core of the brand and develop based on it, without making unnecessary gestures.

In any case, all these three terms are present in any brand. If the network has target consumer, in his mind there is this three-level stereotype. It needs to be clarified, and then turn to three options for expanding the brand of the retail network, each of which can be used independently of each other with the help of sub-brands. At the level of the situational model, you need to find out the difference between the situational model of your brand and competitors. Let's say your supermarket is more for household, and the competitor has an inclination towards the economy country house. In this case, you need to focus on the differences in housekeeping in urban environments and build your sub-brand in the categories of related products.

The level of the role model sets a certain average consumer, a personality type. A role model always has some stereotypical activities (and no others). This is not a living person, but only an average template of a certain type of person. And the role model also has a certain set of situational models that reveal what this model does. For example, the Mother's role model focuses on caring for children (and feeding them naturally), while the Careerist does not feed anyone but herself, but feeds herself on strictly dietary or hedonistic foods. The retail chain brand can expand into these categories, which are, as it were, intended for a role model, take a place on the shelves and in the mind of the consumer, strengthening the position of the retail chain.

The third option is the cultural factor. Every culture has its own consumer lifestyle. And a sub-brand, a supermarket private label, can become part of that lifestyle. If the cultural factor of the trade network brand includes a component of ethnic Russian culture, then vodka, kvass, and a number of other traditional products of Russian cuisine can be represented here. If it's more of a cosmopolitan, westernized culture, then the sub-brand can spread into the "European" product segment. In general, brand expansion can be very strong, and these sub-brands must have a connection with the parent brand of the retail chain. In fact, they will be its advertisement, convey its ideology.

Perhaps, using the expansion strategy is not very simple. Indeed, in this case, one has to face such delicate matter as the psychological reality of the consumer. In addition, you will have to consider in detail what few people think about - the retail chain's own brand. Yes. This is hard. But if it were easy, a lot of stupid books would be written about it and it would become commonplace. In the meantime, those wishing to successfully expand retail business there is some edge. However, the strategies of substitution and dumping, I would like to believe, are much simpler and do not require such a deep understanding of the behavior of the consumer. However, they also allow you to earn on private labels. Possibly making a lot of money. The main thing is to start thinking and asking the right questions. And there will be answers.

Private label (PL) in retail is a store brand that is developed and promoted by retail chains. Private label is sold only in one chain and is its unique advantage.

STM allows you to get out of the competition between stores for the best prices. It is difficult for the buyer to compare it and understand that in one place a similar product is cheaper than in another.

At the same time, retail earns more on private labels than on the main assortment, forcing the supplier to give minimum prices. Due to the discount from the supplier, the buyer receives a product 20% - 30% cheaper than its counterpart.

Retail gets everything - minimal competition for its product, a loyal customer and maximum income.

What products are hidden behind a private label

Initially, the goal of the private label was a reasonable price-quality ratio. In an effort to get the best deals, chains set the characteristics that the product must meet. (Example of characteristics in “Dixie”). The supplier who offers the lowest price wins the tender and gets the opportunity to supply for a certain period. In an effort to win the tender, the supplier sets a ceiling price. As a result, the slightest unplanned increase in costs can be critical. And production is a risky process: either the packer broke down, or the refrigerator overheated.

As a result, the main share of private label is cheap goods on the borderline of quality. How do you feel about the “Red Price” in Pyaterochka or “Every Day” in Auchan? Do you put them in your shopping cart because it's the best offer, or because it doesn't matter what kind of product it is? Or don't put it in at all? The private label has established itself in the minds of customers as "cheap", but not always "high quality".

But for private label retail, there are a lot of advantages. Chains are interested in developing not only low, but also higher price segments. And so that the buyer does not associate them with a cheap assortment, they are promoted under other brands.

Auchan has 2,651 private label products, of which 72% are Every Day and 28% under other brands. We think that Pyaterochka's own brand is Red Price, but if we look behind the scenes, we find out that the chain has a huge number of brands.

Very often, filling our cart, we do not even realize that we are taking private labels. We receive a unique product favorable price which is not sold anywhere else.

Private label examples

Dixie Auchan Pyaterochka Azbuka Vkusa Magnet Tape Metro Okay Crossroads Carousel

Private label development strategies

Advantages and disadvantages of private label for retail

Advantages

1. A private label forms a distinctive advantage over competitors by offering the consumer a unique set of products at the best prices. The more private labels in the basket, the higher the loyalty.
2. Reduced dependency on suppliers. Private label helps to reduce the influence of brands and fill the missing range with your own brand.
3. Reducing consumer dependence on . The share of promo is growing every year. STM offers a profitable offer without a promotional price.
4. At a low cost, private label returns are often above average. The average level of STM front margin is 35-40%.
5. Formation of loyalty due to the advantage in the ratio "price - quality".
6. Providing the population with socially significant products.

Flaws

1. High costs for product quality control. Chains monitor compliance with standards at all stages - from the production of goods to its receipt in stores. This requires additional costs for personnel and organization of business processes.
2. In large networks, providers cannot provide sufficient volume, as a result one position is carried by completely different suppliers. This leads to a complex organization of processes and an increase in operating costs.
3. Positioning risk. The discrepancy between the positioning of private label and the brand of the store can lead to misunderstanding. If "Azbuka Vkusa" develops products of the low price segment with the "AB" logo, it may confuse the buyer. The premium perception of "Azbuka Vkusa" will be compared with the cheap "AV" product, which will lead to confusion.
4. Loss of turnover due to loss in value. Replacing an expensive product with a cheap one leads to a loss in turnover. If earlier the buyer purchased cottage cheese for 100 rubles, and now he takes an analogue for 70 rubles, then sales will decrease by 30 rubles. Despite the fact that retail can withstand a higher margin (%) of its own brand, it can suffer losses in turnover (rubles) and even in gross income (rubles).

Advantages and disadvantages of private label for suppliers

Advantages

1. Formation of a loyal attitude of the network towards the supplier. The retailer is interested in its own brand, therefore, choosing between two suppliers, it will give preference to a company that, in addition to its own brand, will also produce private labels. This is an opportunity for closer cooperation with retailers.

2. Savings on logistics. Usually, manufacturers make almost no money on their own brand, but save money by reducing logistics costs.
For example, they produced 100 units of products under their own brand and delivered them by car for 5,000 rubles. This means that the delivery of a unit will cost 5000 rubles / 100 units = 50 rubles / product. If you supply another 400 units of your own brand that fits in the same machine, then the cost of delivery will be reduced to 5000 rubles / (100 + 400) = 10 rubles / product. So the cost of delivery will be reduced from 50 rubles. up to 10 rubles per unit of production.

Flaws

1. If the supplier does not established business processes and the operational work in the company is not built, then participation in the production of its own brand is risky. Production must be debugged and run like clockwork.
2. The network can replace the provider at any time. When participating in the production of our own brand, we always remember that the chain is the owner of the brand. The supplier bears the risk that at any time the retailer will switch to another with more favorable conditions. The question is often not whether to replace it or not, but when it will be replaced. It is impossible to stay on the Olympus in a highly competitive market.

3. Low margin for the supplier.

High competition in the market forces suppliers to reduce the cost to a marginal level. Usually they do not earn on their own brand, but use it to form loyal cooperation with retailers. The supplier produces private labels for the network, and the network allows him to earn on a different assortment.
4. Risk of long-term planning. In an effort to reduce costs, the supplier purchases raw materials and equipment with long-term payback. For example, in order to reduce the cost of packaging, the manufacturer will be forced to purchase it in volumes for years, rather than months of sales. And if you fail to win subsequent tenders, what will happen to this package? Frozen money for an indefinite period. Buying additional equipment and hiring staff carry no less risks.
5. The need for strict control over all stages of production. Production must comply with all requirements and standards. Network employees check for compliance with production standards.

6. "Narrow links" in production are unacceptable. For example, there is only one packaging machine and it breaks down. What will happen if by the end of the day it is necessary to deliver the goods to the distribution center of the store, and production has stopped? Lost goods and the highest fines for non-compliance with the terms of the contract. The manufacturer has to buy optional equipment for production.
7. Retail chains can phase out small and medium-sized brands in favor of their own brand. As a rule, strong market players do not suffer. But as we said earlier, even Coca-Cola can lose its leading position.

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After weighing all the pros and cons, let's summarize. Private label provides networks with positioning and additional profit opportunities, but for suppliers it carries high risks. He must evaluate the readiness of his business for maximum loads and minimum profits. For him, his own trademark is the possibility of closer agreements with the network, the formation of trusting relationships.

Due to its own brand, retail ceases to be an intermediate link between the consumer and the manufacturer. It already resembles a vertically integrated holding, controlling production and sales - from raw materials to the buyer.

Stores strive to increase the share of private labels, go through all the stages of strategies. From cheap goods to profitable, from profitable to loyalty, from a loyal group to a store in which Private Label is a leader in sales. And maybe the day will come when the private label will push all brands out of the store. Say, "Not likely." Let's see what lies ahead of us.

Creating a name for a brand is a long and multi-stage process, and it can be divided into nine main stages.

• 1. Marketing block:
  • * analysis of the goods produced (purpose, quality, benefits, benefits, and so on);
  • * competitive analysis (consumer segments, price category, positioning, names, and so on);
  • * segmentation of consumers (including the study of their expectations from the product group, perception of quality, life values, lifestyle, consumption patterns, and so on).
• 2. Brand positioning (including the concept of positioning).
• 3. Brand identity (including brand essence).
• 4. Approval of the content and formal requirements for the name.
• 5. Creation of a series of names that meet the stated requirements.
• 6. Construction of semantic fields for names.
• 7. Expert testing of names.
• 8. Testing names by consumer groups.
• 9. Legal expertise.

Why is a brand name one of the most important brand attributes? First of all, because the name replaces the idea of ​​the brand and the product itself in all communications related to the brand. When we come to the store, we do not say: "Give me a bottle of highly carbonated soft drink on spicy-aromatic vegetable raw materials." Most likely we will say: "I'll have a bottle of Baikal." The second reason is that the brand name is most often contacted by consumers, and, as a rule, it is the most active communicator. The first impression often determines the consumer's attitude towards the company or product that is branded. Al and Laura Rice underline the special importance of the brand name, calling one of the 22 immutable laws of branding the Law of the Name: “Of all the tasks of branding, perhaps the most important is the name that you give to your product or service.”

Brand and consumer name - Before answering the question of what a good name for a brand should be, consider what names and titles people prefer to use. Each object and phenomenon has its own verbal designation, but sometimes people call them in their own way.

accuracy and capacity. Often, consumers themselves replace the established name or brand name with a popular expression that “grows” to it so much that the original name practically ceases to be used. Why did an automatic camera become known as a "soap box"? For two reasons: firstly, it really looks like a soap dish in shape and, secondly, it is just as easy to handle. Many words "stuck" to the product, as they very aptly characterized the shape and design features: so, a satellite dish is called a “dish”, a table of a similar design is called a “book”.

brevity. What do people call "Industrial Construction Bank"? "Promstroybank" or else - "PSB". Why not full name? Too long. For the same reason, the Savings Bank of Russia is popularly called Sberbank, they say not the Central Clinical Hospital, but the Central Clinical Hospital. That's why operating system Microsoft Windows was simplified to "Windows", the computer was reduced to a "computer", the Apple Macintosh became a simple "Mac". The reduction of long and complex names to a simple and expressive word is typical not only for Russian consumers.

expressiveness. An important feature The Russian language is its expressiveness, that is, the ability to convey in speech not only the content of the concept, but also one's attitude towards it. So, replacing the word “TV” with “box” conveys a dismissive attitude towards quality. transmitted information and transmission level. Or the neutral word "restaurant" is often replaced by the expressive word "tavern", expressing the atmosphere, the quality of the cuisine and the level of service. The negative attitude towards the use of a ready-made phonogram at concerts is conveyed in the short and caustic word "plywood": something primitive, rude and unreal is expressed in it.

Euphony. There are such words in the language that require internal effort to pronounce, it is unpleasant to speak such expressions. As a rule, in the competition between words, among other things, those that are more pleasant to the ear win. For example, the word "airplane" is more consistent with the structure of the Russian language than "airplane". The same metamorphoses occur with the names of brands. A package of milk from the Petmol plant began to be called "spotted" for cow coloring.

Thus, if we do not want the people not to replace the name proposed by the manufacturers with their biting word, we need to make sure that the brand name is accurate, capacious, short, lively, emotional and euphonious. The brand name must be suitable for use in a variety of brand communications and contexts of use. The brand name should also not bother or irritate with prolonged and intensive use. it General requirements to the brand name.

• 1. A well-chosen name should be very precise and meaningful, point to one (several) of the following categories or be associated with them:
  • * the idea of ​​brand positioning;
  • * the essence of the brand;
  • * the main difference from competitive brands;
  • * the main benefit or advantage for consumers;
  • * the result from the use received by the consumer;
  • * purpose of goods, product category;
  • * main aspects of quality or certificate of quality;
  • * composition, design features of the goods;
  • * trade offer to its consumers;
  • * the main value of the brand from the point of view of consumers;
  • * style and standard of living of the consumer;
  • * motives that encourage consumers to buy this brand;
  • * price category;
  • * situations of use of goods;
  • * commodity purchase situations.
• 2. Another requirement for the brand name is the absence of negative associations with the listed categories. The brand name should not mislead consumers, diminish the perceived quality of the product, conflict with the brand identity, or blur the purpose, benefits, and benefits of the brand.

As a rule, a successful brand name contains references to several categories at once or is associated with them.

formal requirements. The brand name is a word or phrase, and it must meet the requirements related to its oral and written use, meeting the following criteria.

• 1. Phonetic criteria:
  • * The name should be rhythmic and easy to pronounce and correspond to the sound structure of the language in which the name is used.
  • * The sounding name must be significantly different from the names of competitive products.
• 2. Phonosemantic criterion. If the name is a neologism, its sound should evoke positive associations consistent with the brand identity.
• 3. Morphological criterion. For compound, hybrid, abbreviated words and abbreviations, the meaning of each of constituent parts and the whole word and associated associations should be consistent with the brand identity.
• 4. Lexical criterion. The meaning of the word from the active vocabulary should correspond to the brand identity.
• 5. Semantic criteria:
  • * The associations evoked by the word must match the brand identity.
  • * The name should not cause negative associations in all languages ​​of its use in the context of brand identity.
• 6. Lexicographic criteria:
  • * The printed title should be easy to read.
  • * It should be clear whether this name is written in Cyrillic or Latin.
  • * Putting stress in the title should not be difficult.
• 7. The criterion of perception and memorization. The name should be easily perceived and well remembered.
• 8. Legal criteria:
  • * Trademarks with such a name should not be registered in the given class and country of possible use of marks.
  • * The name must not fall into the category of names that are not subject to registration as a word trademark.

Ways of formation of names. How should brand names be created, where to find them? Let's turn to the already existing names. Most of the names can be divided by referring to their morphology. Such a classification is rather arbitrary: some names fall into two or three categories at the same time. For example, the name "Beeline" is related to the categories "foreign word" (bee - translated from English - "bee" + line - "line"), "compound word" (formed by adding two words) and "metaphor "("bi" - double, reliable + "line" - line, connection). The name Lego falls into the categories "foreign word", "abbreviation", and "synecdoche".

There are also such names that cannot be attributed to any category, it is even difficult to understand what it has to do with the product, its features, the company or its founder. However, can such names be called successful? Table No. 1 note 1 lists some categories of brand names.

The table shows that the ways of forming names are diverse. Some categories are used frequently, such as abbreviations, acronyms, historical names, or metaphors. Others - such as hybrids, hyperbolas, litotes or oxymorons - are used quite rarely. The structure of Russian speech is not very characteristic of mimicry, developed in English language, which is why it is so rarely used in the names of Russian brands.

Where do stamps come from? There are several ways:

• 1) the use of old Soviet and GOST brands (beer Zhigulevskoe, Doktorskaya sausage);
• 2) purchase of a finished brand, franchising (My family Petrosoyuz, Nidan Foods), creation of a brand by a packaging supplier (TetraPak policy);
• 3) copying someone else's brand or a follower's strategy (Menshevik with his Lizun Sosun, etc.; TORNCosmetic with the brands Cedar Balm, Aquarelle, 32 pearls; Ruscafe from the Russian product);
• 4) independent development (Korkunov);
• 5) involvement of specialized agencies (Russian standard).

The most expensive, but also the most competent option is the last one. It is to him that we will pay the main attention, presenting ourselves as the coordinators of the project to create new brand- it is in this capacity that the brand manager most often has to act.

In this case, you can resort to the services of a brand consulting company (over the past year or two in Russia there has been a trend towards their appearance) or an advertising agency that will take on the functions of developing a brand, attracting specialized research and design companies in the process. At the same time, you can directly contact designers and researchers with brand concepts already prepared within the company (Fig. No. 1.1, No. 1.2), note 2.

The sharp drop in the purchasing power of the population in 2014 led the Russians to the need to revise their priorities - the final cost of the goods becomes the cornerstone, which, with the proper quality of products, should be as low as possible. People are beginning to make purchases more thoughtfully, objectively assess the price / quality ratio of different products within a product group and make a choice in favor of the most profitable purchases. The added value of the brand name in the FMCG segment is coming to naught. Networks are forced to reduce the margin, losing profits. How to keep profit and stay afloat? You will learn about this in the material of the commercial director of the Vneshtorg Group of Companies Anton Viktorovich Paremsky.

Three major market trends retail over the past 5 years are:

1. Empowering the Buyer
2. Consolidation of the B2C market
3. Increasing competition among suppliers leading to lower margins

One of the main ways to restore the margin and get away from direct price comparison in conditions when all prices of all sellers were in free access, and the winning positions were occupied by those who are able to offer the best price - to introduce private labels (PL) of retail chains and direct manufacturers of products into the main commodity groups. The larger and more dynamic Food and FMCG markets were the first to pick up the trend. She then entered the DIY and home appliance market.

It became obvious that trademark holder (TM) - an extra link in the commodity chain. It can be eliminated by working with the manufacturer directly or by starting your own production. Chains are starting to start their own TM and form an assortment and price offer. And this trend will develop: chains will launch more TMs, and the share of private label sales will grow. At the same time, the number of TM will increase insignificantly, but the sales volumes will grow very significantly - at least 5-6 times.

Not inferior in quality to goods of the middle price segment from TM holders, goods under private label traditionally belong to the lower price segment. This is because the goods of this category are placed directly at the factories, the trademarks of the chains, having no capitalization, do not increase the cost of the goods.

Creation of private label in the DIY segment

Trading goods of technically complex groups allows you to earn more due to higher margins. It is the DIY segment that is the most profitable in this regard, but also the most difficult.

The process of creating private labels for technically complex goods involves a number of risks for chains:

• weak dynamics of switching consumer preferences due to the high importance of brands in this group of goods
• low inventory turnover
• additional costs for providing after-sales service of goods and maintaining a warehouse of spare parts
• the minimum number of deliveries for regional networks leads to the need to provide a stock for six months in advance (bringing 10-12 sku can cost the network 100-150,000 dollars)

These risks fall on the networks, creating additional costs. Because of this, the attractiveness of this product group is significantly reduced. Even regional leaders see independent creation of private labels as unprofitable. Therefore, it is more rational to outsource the process to companies specializing in this. Their specialists are usually experts in their fields and know the market well.

It should also be borne in mind that most of these companies are limited to ensuring the supply of goods directly from factories in China. But an important stage of full-fledged competent work on the creation of private labels should be the development of an assortment matrix in accordance with the current situation on the market and the level of competition, the results of research on sales statistics and the wishes of partners. Each input matrix must be designed for a specific client, suit him and be strictly personalized.

Client search

There are not so many DIY networks, you can type in any search engine "TOP 10 DIY networks" - and the key is in your pocket. Another thing is how to start working with them, how to convince them to outsource this process. For us, first of all, the reputation and rich experience of each of the members of our team works. The total payroll fund for specialists involved in different stages of private label creation is 1.5-2 million per month. It is clear that it would not be expedient for every company to maintain such a team in the state.

Manufacturer search and matrix formation

The territory of Russia is huge and divided into regions and macro-regions, and Russian market The tool is highly segmented and has features depending on the geographic location. In this regard, different brands prevail in different areas. Quite common is the situation when local dealers set the direction for the development of the entire product group in a particular region.

When working with a client, the key factors are both the general vision of the market and the situation in a particular area. In order to make the search for a manufacturer as effective as possible, it is necessary to analyze the goods of the client and his competitors, and only after marketing analysis form a matrix, under which a specific manufacturer will be selected. Usually the choice is made based on the client's requests, taking into account three key factors:

1. The situation in the region
2. The policy of the network itself
3. General Market Trends

The number of manufacturers in China is huge, but finite. 95% of them are located in Southeast Asian countries, we know absolutely everything. Since one of the important parameters is the quality of the product and its scope (household, semi-professional, professional), the circle of possible manufacturers is narrowing. As a rule, there is a certain assortment that can be offered to a particular partner. The final decision is made based on a combination of price factors and appearance rulers.

The composition of the matrix is ​​determined by three factors:

1. Budget
2. Network specialization
3. Competitive environment

The basis of almost any matrix is ​​the position of category A (screwdriver, puncher, jigsaw), but the saturation of each category, additional product groups determine the parameters listed above.

Marketing

When promoting Chinese manufacturers in Russia, most often the main component of the marketing strategy comes from the manufacturer himself, since he has a clear idea in which niche he works. There are eight different tool segments on the market, however, there is not a single line that would work in all segments at the same time. Usually the widest range covers about three or four segments.

• focus on quality and supplier marketing budgets
• develop its own strategy for each segment, since the strategy aimed at promoting a home tool will differ from the strategy for promoting a professional tool
• guide marketing strategies targeting - give preference to SMM channels

If the work is carried out with a ready-made brand of a Chinese manufacturer, then the main message is set by the manufacturer. Your task is to adapt it to the Russian consumer. If a brand is developed from scratch, then a unique identity is formed for each region. For example, partners from Karelia and Petrozavodsk prefer Scandinavian, European themes, while clients from Central Russia and the Urals gravitate towards Russian names, often referring to the Soviet past, such as TechMash.

When creating private labels by order of retail chains, the marketing component lies with the customer himself. It is important to take into account that private labels are, as a rule, a low budget segment, where the main trump card is the price.

Participation in production processes

Production control is one of the top quality priorities. Tool production must be controlled absolutely at all stages. Ideally, if possible, for these purposes it is worth creating a headquarters of professionals right in China. Depending on the size of the project, control can be carried out up to ensuring the development of a unique design for a particular client. At the initial stages, external elements are developed: naming, branding, form style and packaging, or a ready-made solution with maximum branding is offered. In the future, quality control is carried out at each stage.

Distribution

Most often, STM is developed for a specific retail network, which places the product on its shelves and is subsequently responsible for the sale of the goods. This process should also be controlled - to give recommendations that are guaranteed to ensure high sales. Product placement in prominent places, training and motivation of sellers have a significant impact on the success of the brand.

STM on a turnkey basis

The main task of the Vneshtorg Group of Companies is the creation of private labels for large networks and Internet platforms focused on cooperation with distribution channels.

Vneshtorg Group of Companies provides its clients with the service of creating private labels on a turnkey basis in the DIY segment, specifically in the “power tool” category. The service includes the following elements:

1. Development of a matrix and selection of a manufacturer. Consolidation of orders from factories to get the best price
2. Marketing component: naming, history and legend, corporate identity, market positioning
3. Control production processes and transportation of goods to the partner's warehouse

"Vneshtorg" is distinguished by an individual approach to each client. We select manufacturers - leaders in their segments in terms of quality - and bring their products to the Russian market. And most importantly, we provide services for the development and promotion of private labels.

We believe that the client should focus only directly on the sale, so such moments as the development and printing of BTL materials, training of salespeople, service maintenance we also take over.