1.

Brand Building (contd)

2. Managing Retail Brands
MKTG 6190 - Brand Management
Masters in Marketing Programme Cohort 15
Lecture # 5 (03-05-14)
Branding a Commodity
Commodities are largely
undifferentiated products that offer
little-to-no perceived differences
between competitive offerings.
With little-to-no perceived differences,
consumers shop for commodities
primarily on a low price basis.

Branding a Commodity

With little-to-no perceived differences in
the category, how can a commodity
marketer gain a competitive advantage?

The answer: Branding!

Branding a Commodity
Branding enables the commodity
marketer to distinguish his offering in
the category by emphasising a unique
promise of value that does not
necessarily come from product
attributes.
Branding a Commodity
Other than product attributes, what can a
commodity marketer use as points of
differentiation?

In other words, whats the process of
branding a commodity?
Branding a Commodity
1. Enhance existing product with new
Plus 1 features (small, incremental
differentiating features) or innovative
packaging and merchandising
Branding a Commodity
2. Bundle product with other highly
sought products e.g. create value-
added packages or variety packs (i.e.
leverage brand equity of
complimentary products)

Branding a Commodity
3. Promote the service benefits rather
than the product attributes:
a) Better payment terms
b) Better warranties and guarantees of
quality
c) Quicker delivery
d) Superior after-sales service

Branding a Commodity
4. Involve the customer in the life of the
brand.

Customers have a way of knowing what unmet needs
there are and they are usually happy when a company
comes along and asks them how to serve them better.
They are comparing you against your competition
constantly and will often have insights and data that
you don't
Dave Dolak (How to Brand and market a Commodity)

Branding a Commodity
5. Superior Marketing Communications.
Once you have figured out the
differentiating factors then promote them
with an active communications program that
tell the story of your brand in creative ways
that the category has never seen.

Retailing
Consists of the sale of physical goods or
services for direct consumption by the
consumer
Usually from a fixed location, such as a
department store, boutique, kiosk, by
mail or internet website.
Sale is usually in small or individual lots

Some Types of
Retailing Formats
Mom & Pops
Convenience Store
Variety or General
Store
Specialty Store
Department Store
Discount Store
Hypermarket
Supermarket
Mall
Warehouse Club
E-retailer
Vending Machine
Merchandise Management
Brand Managers must have an exceptional idea of the
merchandising decisions made by retailers who carry
their brand
Category Management refers to the decisions
retailers make with respect to the number of different
product categories to carry to maintain a profitable
operation
Assortment Plan refers to the decisions retailers
make with respect to the number of different brands to
carry within each category and then the number of
different SKUs to carry per brand (# of product variants)


Factors that Influence
the Merchandising Decisions
The number of categories; the breadth and depth of the
assortment per category (number of brands and SKUs
carried) is influenced by:
Target Market preferences & demographics
Level of competition
Retailers image, store positioning & strategic
objectives
Store location
Stock turnover & Profitability
Financial and other constraints
Understanding SKUs
The Stock Keeping Unit (SKU) is a unique, usually
alphanumeric, code used to identify a particular
variant in a product line or brand range

Primary use of SKUs is for inventory control
Possible SKUs
for a Brand of Bottled Water
400ml 650ml
reg.
650ml
sport
1.5L 5L 8L 5G
Each A1-01 B1-01 C1-01 D1-01 E1-01 F1-01 G1-01
By case/24 A2-24 B2-24 C2-24
By Pkg./4 E2-04
By Pkg./6 E3-06
Other
Package Sizes
H
o
w

S
o
l
d

Therefore there are 12 SKUs for this brand
A retailer has to determine which SKUs will be carried in his assortment
plan and then how much of each selected SKU will be stocked
Importance of SKUs to
the Brand Manager
Reveals customer behavior towards the brand
track popularity levels of various package sizes, flavours,
by target market, by geography, by retailer, etc.
Enables more accurate forecasting & product
allocation in the Trade reveals consumption/usage
patterns
Customize promotions Focuses A&P spend and
promotional appeal to customers
Portfolio Management foster high performing
SKUs, prune poor performing SKUs and introduce new
SKUs.
Visual Merchandising
This is the activity and profession of
developing floor plans and three-dimensional
displays in order to maximise sales. Both
goods and services can be displayed to
highlight their features and benefits.

The purpose of such visual merchandising is
to attract, engage and motivate the customer
towards making a purchase.
The Purpose of
Visual Merchandising
Make it easier for the customer to locate the
desired category and merchandise.
Make it easier for the customer to self-select.
Make it possible for the shopper to co-ordinate
and accessorise.
Recommend, highlight and demonstrate
particular products at strategic locations.
Use of Planograms
A planogram allows visual merchandisers to
plan the arrangement of merchandise by
style, type, size, price or some other
category.

It also enables a chain of stores to have the
same merchandise displayed in a coherent
and similar manner across the chain.

Use of Planograms
To communicate how to set the merchandise.
To ensure sufficient inventory levels on the
shelf or display.
To use space effectively whether floor, page
or virtual.
To facilitate communication of retailer's brand
identity.
To assist in the process of mapping a store

Use of Planograms
Figure 12: Planogram Examples
Store Layout & Design
An understanding of the impact of store design on the
shopper
Space
Once the overall structure and circulation of the
space has been determined, the atmosphere and
thematic of the space must be created through
lighting, sound, materials and visual branding.

These design elements will cohesively have the
greatest impact on the consumer and thus the
level of productivity that could be achieved.

Lighting
This can have a dramatic impact on the
space it needs to be functional, but also
complement the merchandise, as well
as emphasising key point throughout
the store.
Poor lighting can cause eye straining
and an uncomfortable experience for
the consumer.

Sound
This atmosphere can be developed through sound and
audio. The music played within the store should reflect
what your target market would be drawn to, this would
also be developed through the merchandise that is being
marketed.

In a lingerie store the music should be soft, feminine and
romanticised; where in a technology department the
music would be more upbeat and more masculine.

Colour
This is also important to consider it must not
over power or clash against the merchandise
but rather create a complementary background
for the merchandise.
As merchandise will change seasonally the
interior colours should not be trend based but
rather have timeless appeal like neutral based
colours.



Architecture
The choices made must not only be aesthetically pleasing
and persuasive but also functional with a minimal need for
maintenance.
Retail spaces are high traffic area and are thus exposed to
a lot of wear this means that possible finishes of the
materials should be durable.
The warmth of a material will make the space more
inviting, a floor that is firm and somewhat buoyant will be
more comfortable for that consumer to walk on and thus
this will allow them to take longer when exploring the
store.

Visual Branding
The key factor is consistency. Exterior branding and
signage should continue into the interior, they should
attract, stimulate and dramatize the store.
The interior branding should allow the consumer to
easily self-direct themselves through the store, proper
placement of sales signs that will draw consumer in and
show exactly where the cashier is located.
The branding should reflect what the merchandise is
and what the target market would be drawn to.

In-Store Advertising
In-store advertising is any advertisement placed in a retail
store.

It includes placement of a product in visible locations in a
store, such as at eye level, at the ends of aisles and near
checkout counters), eye-catching displays promoting a
specific product, and advertisements in such places as
shopping carts and in-store video displays.

Examples of
In-Store Advertising Types
Shelf-talker: A gondola-shelf sign to draw attention to the product
Aisle interrupter: A sign that juts into the aisle from the shelf.
Dangler: A sign that sways when a consumer walks by it.
Dump bin: A bin full of products dumped inside.
Glorifier: A small stage that elevates a product above other
products.
Wobbler: A sign that jiggles.
Lipstick Board: A board on which messages are written in crayon.
Necker: A coupon placed on the 'neck' of a bottle.
Point-of-Purchase or Point of Sale displays: usually at check-out
counter. Capitalizes on low involvement and impulse buying
behaviour

The Rise of Store Brands
The last few years have seen the rise of the
large format retailers e.g. -
Wal-Mart (USA)
Home Depot (USA)
Marks & Spencer (UK)
Price Smart (Central America & Caribbean)
What do all these retailers have in common?
They all carry their own Store brand, (in addition to
other manufacturer brands)
Some familiar Retail
Store Brands
Paper Rolls
Cranberry
Juice
Baked Goods
Some familiar Retail
Store Brands
Why have a Store Brand
Lack of store differentiation
Facing a marketplace overflowing with stores, retailers
have turned to building their own brands as a way to
stay unique and grow
Discounting
The widespread availability of the same manufacturer
brands has led to retailers engaging in discounting to
turnover volume. This has the effect of eroding
margins. Retail store brands have emerged to arrest
this problem
How Store Brands Grow
1
st
Option Follow the leading manufacturer
brands
Lock up an inordinate amount of shelf space
Brand design should reflect a similarity such that
consumers associate the retail brand with the
benefits of the leading brand
Idea is to get consumers to try store brand and
convince them that it has the same quality as the
leading brand, thereby effecting a brand switch
How Store Brands Grow
1
st
Option Follow the leading
manufacturer brands (contd)
Design of retail store brand should reflect
similarities to the leading manufacturing brand
as follows:
Color
Packaging shape
Label and graphic designs
Name typography etc.
How Store Brands Grow
2
nd
Option Associate retail store
brand with attributes of the store
The emphasis should
turn to associating the
brand with the values
and positioning of the
store
It therefore becomes a
genuine instrument of
differentiation for the
store
Loyalty to the retail store
brand translates into
loyalty to the store
Benefits of Store Brands
Market size justifies long production runs,
thus bring economies of scale
Higher margins can be sustained for the
given product category
Advertising is relatively low and restricted to
shelf-talkers, in-store displays.
The product bearing the brand achieve
quality recognitionbuilds equity for store
Study Question
A Brand Manager is of the opinion that the
rise of store brands and private labels is just
a fad. As this novelty wears out, consumers
will quickly revert to manufacturers brands.
State whether you agree or disagree
with this opinion, justifying your answer
with examples and illustrations

Study Question
More and more retailers are developing their
own store brands.
(a) Discuss the possible motive for this
action
(b) Recommend ways by which these
retailers can effective grow their store
brands
(c) Explain the benefits of carrying store
brands
Required Reading
The Business of Brands - Millward Brown

How to Brand and Market a Commodity David Dolak

Retailing Management Levi & Weitz 7
th
Edition or Later

The New Strategic Brand Management JN Kapferer
3
rd
Edition or later