Excerpt of further issues topics: Brand Equity and Brand Strategy, Brand Equity and Brand Diffusion, Brand Equity and Company Success, Brand Equity and Sales and Acquisition of Brands or Companies, Brand Equity and Marketing Investment

Not Private Labels but „Dual Functionality of Retail“ are the Underlying Challenge for Traditional Manufacturer’s Brands

„Private labels“ are the standard for retailers with a predominant share of classic brand articles and a full range of products. Nest to the store brand, which is mostly positioned next to the price entry level, the offer is often completed with a product line whose package design and presentation are more closely based on brand products. These products can serve retail in cultivating a profile for the consumer. A study of PricewaterhouseCoopers shows the share of private labels in Germany adds up to about 30%. According to this study consumers do buy private label products, but mostly in the lower price range. Nevertheless, the study also shows that from the point of view of the consumer the development of store brands into the premium segment is, by all means, conceivable.

From the standpoint of the manufacturer’s brand industry, private labels are initially simply a competitive product which manufacturer’s brands have to face up to in an efficiency contest. Where retail sells private labels at a relevant extent, this competitive conflict receives an additional component: Private labels turn the sales representative retailer into a competitor at the same time.

The new role perception of retail, making less use of producing manufacturers, thus taking on the function of manufacturer, does have consequences for the world of manufacturer’s brands. Shelf space of limited availability at shops has to be allocated anew. As a rule, this happens at the expense of manufacturer’s brands. B- and C- brands are removed increasingly from the retail list. Innovative products are quickly copied by retail and as such brand management of manufacturer’s brands is required to act with even higher effectiveness and efficiency when it comes to leading its brands.

Where do we go from here? To generate enough knowledge about one’s brand is a fundamental basis for a successful future: One person receives hundreds of brands messages every day – and maybe remembers two. For true brands this means they have to be clearly recognizable and they have to be tied to a distinct message. It gets difficult when a brand is excessive. To recognize deficits early, develop full potential expediently, to make a go of a brand, all this is only possible if the brand manager and business management have enough information at hand that is needed to make expedient and efficient brand decisions. It is imperative to not just superficially look for quick money, but for long-term success. In order to focus on long-term success the monetary brand equity has to be known, because only the knowledge of the monetary brand equity leads to making success in brand leadership visible, measurable and interpretable. Has the monetary brand equity not been determined, it is up to all involved how they evaluate the result of brand leadership and which decisions and activities they deduce from it. Only the knowledge of brand equity reveals the contribution the brand makes in regard to yield. While the contribution of the brand is often seen in achieving a higher operating margin than would have been possible without a brand, a successful brand management today and in the future requires a more fundamental understanding.

Strictly speaking, brands are a system for the creation of value geared towards a sustainable earning power from processing crude materials all the way to the presentation in a store. Therefore it is not enough to merely concede that brand products achieve a higher sales price, but in fact, brands are independent corporate assets, just as other corporate assets which represent a monetary value and subsequently need to earn interest. A systematic, reliable and exact analysis of brands and their monetary value is indispensable. And not just once, but in regular intervals.