merchandising of private brands vs manufacturer brands · pdf fileimpact in the sales ponit...

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january · april 2007 · esic market

Merchandising of private brands vsmanufacturer brandsPedro Galván Guijo

Universidad Complutense de Madrid

AbstractUnder the holder of “Merchandising of Private Brands vs. ManufacturerBrands” the article makes a review to the general concepts related to the-ses BRANDS, as well as the present state of them. Not alone this, it givesa present vision of the Spanish market as well as a general vision of Euro-pe and the U.S.A. From this point of view, we enter is a essential problem that DistributionBrands have, how do the retailers support their brands with Marketingactions but concretely, the significance of the MERCHANDISINGACTIONS inside de Marketing Mix used and its comparison to the onesused by manufacturers in the commercialization of their BRANDS. The study is focused mainly in three aspects:POSICION AND SPACE OCCUPIED IN THE LINEAL oneQUALITY OF THE CONTAINER OF PRODUCTS BRAND OF DIS-TRIBUTION vs BRAND OF MANUFACTURERACTIONS OF COMMUNICATION CARRIED OUT BY THEM PRI-VATE BRANDS, IN THE POINT OF SALEThe article is fed by a wide data base of extensive statistical representa-tion, based on the Observatory that, since 15 years ago, the UniversityComplutense of Madrid, have been carrying out.

Keywords: store brands, own brands, own labels, private brands, homebrands.

JEL Code: M31.


merchandising of private brands vs manufacturer brands

We will call Private Brands to those brands that have a very elaboratedesign of packaging, utilize the corresponding market codes and have agreat presence of the brand or logo of the distributor, this makes the per-ception of the assortment of this type of products very high and highly theimpact in the sales ponit (Serra and Puelles, 1994).

Although the additional discounts and promotions introduce a newmonetary mechanism of transfers, between retailers and manufacturersalso are conserved the classical roles of the channels of distribution, that isto say the manufacturer manufactures and the retailer sells. Private Brands,nevertheless, change the relation between retailers and manufacturersgiving the retailers a double role as a “direct” customer of the manufactu-rer, as well as “competitor” in which refers to the final consumer.

The retailers can use the position of their Private Brands in the facingas a strategic element that reinforces its position in the negotiations withthe manufacturer. Besides other motivations, this is one of the main for thelaunching of Private Brands by the retailers (conference on retailing sale ofPaine Webber, to see Giblen 1993).

Here we have a more modern vision of the evolution of the distribu-tion business and how the Private Brands are already considered like astrategic element of marketing. But not alone that, inside the importanceacquired by this kind of brands it appears its merchandising as a new stra-tegic element and fundamental in the relationship between retailer andmanufacturer.

What does private brands mean?Before starting to analyze the definitions, it is necessary to mention the lar-ge number of ways used to name this kind of brands. In many cases weare calling the same concept with different words.

This phenomenon is the same in Spanish:

• MARCAS BLANCAS• MARCAS PRIVADAS

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• MARCAS PROPIAS DE DETALLISTA• MARCAS DE DISTRIBUIDOR• MARCA DE ENSEÑA• MARCA DE CADENA PROPIA• MARCA EXCLUSIVA• MARCA CEDIDA• MARCA GENERICA (GENERICOS)• PRODUCTO BANDERA• CONTRAMARCAS

In English is more or less the same:

• STORE BRANDS• OWN BRANDS• OWN LABELS• PRIVATE BRANDS• PRIVATE LABELS• RETAILLER’S BRANDS• HOME BRANDS(Puelles, 1991; Liria, 1996; Fernandez, R & Reinares, 1998)

In reference to the definitions we will mention only two, that are theones that show a highest level of confusion. We are talking about:

White brands:It is understood when the packing of the product has a single color and inthe label it appears in a prominent form only the generic denomination ofthe product. (Fernández & Reinares, 1998)

Private brands:Are those that dissociate to the brand of the manufacturers those that areproduced by retailers who give it its name or another, different than the

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one used by the manufacturer. Being this merchant the one who carries outthe marketing efforts. (Serra, T & Puelles, J.A. 1993).

Overseas, at the end of the 80’s looked like they had clearer ideas thanin Europe. Following the American Marketing Association we find thefollowing definitions:

GENERIC BRANDS: Products which are named only by their genericclass (e. g. drip-grind coffee, barber shop). Other products have both anindividual brand and generic classification (Maxwell House drip-grid cof-fee, Maurice’s barber shop). Generic brands products are often thought tobe unbranded, but their producer or reseller name is usually associatedwith the product too. This approach is usually associated with food andother package goods, but many other consumer and industrial goods andservices are marketed as generics.

PRIVATE BRANDS: A brand that is owned by the product’s resellerrather than by its manufacturer. In rare instances, the reseller may be themanufacturer as well. The term is often associated with (1) advertisedversus unadvertised brands (a private brand is most often unadvertised),and (2) national versus regional or local brands (a private brand isusually less than national). These distinctions have become clouded bylarge retail and wholesale organizations (e.g. Sears, Kroger, K mart, Ace)who advertise their Private Brands and market them nationally andinternationally.

Also PRIVATE (OR DISTRIBUTOR) BRANDS: Brands that are theproperty right of middlemen in the channel of distribution; they may besponsored by retailers, wholesalers, or cooperative buying groups.

DISTRIBUTOR’S BRAND: A brand that is owned and controlled byresellers (distributor) such us a retailer or wholesaler, as opposed ownedby the manufacturer. The term applies only to the brand itself, not to theproduct or its content. Often called a private brand or private label, and(with exceptions such us Sears’ brands) is usually not advertised heavily.(See also private brand).

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We can synthesize the present situation of Private Brands in:

– Changes in the role of the retailer, from mediation and delivering ofproduct to brand and product management.

– Transformation of the product supply: from White Brands (smallvolumes, lower quality) to manufacturers’ brands and low prices.

– Nowadays: large product volumes of unique format and similarquality to the leader. The price is no more the competitive essentialelement, to focus in the optimization of the relation quality/price.

– Sophistication of the own brands with multiplicity of approaches ofmultiple levels offering a variety of both: product and stores. Threekinds of products can already be told:

• Basic products to low prices -budget-.• Standard products that competes with the manufacturer's

brands -copycat-.• High standing products, for fussy consumers-fantasy-.

– The concentration of self-service outlets (large supermarkets, super-markets and discount stores) makes the Private Brand product’smarket share to grow.

– The development of the Private Brands, due to what it has beensaid, makes the manufacturers lose their capacity of innovation inthe search of new markets.

– Supermarkets and hypermarkets increase the gap between them andthe traditional stores with a market share that is 60.8 %, in Spain.(Gómez, Pérez and Sánchez, 2002).

– Private Brands oddly will be innovators of a category of products,since the increased price would be smaller if the product is easilyimitable. (Scout & Zettelmeyer, 2000).

– Private Brands are a good tool against crisis. In the recent economicdepression that has barely left the United States, these Brands not

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only have kept its levels of business but have grown spectacularly.According to the group NPD, the sales of Private Brands in all thechannels were of fifty-eight thousand million dollars or the 36%, ofthe national total of sales; hundred sixty-three thousand milliondollars, in 2002. Relatively flat figure if it is compared with the pre-ceding periods, significant figures if we compare it with the rest ofsectors that only grew a 2%. During the last 5 years, the sales ofthem Private Brands grew a 5% (Brach, 2003).

– In the United States, one of each five products that was bought insupermarkets, large supermarkets and traditional was one of Priva-te Brands, according to Private Labels Manufacturers Association(PLMA).

As we have been able to verify, the leap toward given by the PrivateBrands has been spectacular, passing from those primitive White Brandsassociated to products of low quality and low price, to the present Priva-te Brands that have changed the distribution, that makes many manufac-turers redefine their business and that have penetrated in the financialmarkets assimilated to the trash bonds of the 80’s. And what is moreimportant, for us, they have opened a new and important gap in the rea-lity of the Marketing.

The greater part of the analysts and, fundamentally, the American con-sultants, think that the phenomenon of own brands can suffer a certainremission in function of the degree of remission of the crisis (of the deca-de of the 90), although the point of return would be completely differentfrom the departure, because of it, the manufacturers should be abstainedto commit the error of not considering, independently, in the taking oftheir decisions this reality of them Private Brands.

Private brands in SpainThe apparition and subsequent development of the Private Brands, as alre-ady we have aimed, would have not been able without the existence of a

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large volume of sales, as well as the evolution of the concentration of theretail channel (Puelles, 1991).

These changes were produced and today we are able to say that the dis-tribution in Spain is characterized for three fundamental aspects: compe-titiveness, growth and concentration (Saws T. and Puelles, 1993).

StatementsWith great profusion has been emphasized how the owners of PrivateBrands did not renounce to actions of marketing, similar to those used bythe brand leaders. Though it is true there is a different “marketing mix”.

The experts believe that the equilibrium in the distribution channels isinclining in favor to the retailers. Professional and academics mention, asevidence, the growth of new discount concepts used in exchange for obtai-ning a greater place in the facing (Chu, 1992; Lariviere & Padmanabhan,1997; Shaffer, 1991), the waves of promotions to the channel (Gerstner &Hess, 1991; Lal, 1990; Lal, Little, & Villages-Boas, 1996), and the proli-feration of the brand’s distributor. These brands are around a 14% of thetotal American market and among the 20-30% of total sales of self-servi-ces in Europe (Quelch & Harding, 1996; Steenkamp & Dekimpe, 1997).

The distributor with own brand should carry out a merchandising acti-vity which increases the sales and margin, without renouncing to the busi-ness of brand leaders. Merchandising activities of Private Brands were notover the 23% and when they did, they did it with a simple poster (81%).(Puelles, 1991).

In the evolution of the Private Brands, there are two different kinds ofstrategies that can be identified. Firstly, the strategies of Private Brands(they seek the identification between the name of the Chain and the pro-duct). In second place, we have the strategies of the brands that have a dif-ferent name than the distributor (do not seek the identification betweendistributor and product through the brand, but through different strate-gies, incentiving the purchase of the product using techniques of mer-chandising, promotions or though the communication to consumer saying

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that is a product selected by the own establishment (Fernández and Rei-nares, 1998).

Therefore our propose is to show:

MAIN HIPOTHESIS: The retailers with distribution brands, with theobjective of increasing the gross margin of the products with these brands,tend to optimize its actions of marketing in the same markets that thebrand leaders.

For the corroboration of this hypothesis we will proceed to contrastthe following basic hypothesis.

In this new framework of negotiation between manufacturers and dis-tributors, Private Brands are going to play a crucial role, the distributorsare going to take the control of the marketing, or have full control in thefacing, via merchandising, as an element of pressure in the negotiationswith the manufacturer (Fernández and Gómez, 1999).

The greater part of the references with own brand are the middle in thefacing (40%), being exceptional not permanent special positions, such asheads of gondola, islands, etc. (Puelles, 1991).

The space of facing dedicated to references with Private Brands in rela-tion to the available space, is between 22% (average of the Alfaro stores)to 78% (in the case of Continente (both today vanished). (Puelles, 1991)

The good location of the private brands is guarantee inside the facing;does not have to pay reference expenses, besides, the retailer locates theirbrand to the right of the leader, given that the 90% of the people are righthanded (Strong and Román, 1999).

The retailers are used to place its brand in a preferential place in thefacing, normally in the shelves situated to the height of the eyes of thebuyer and surrounded by the leader brand/s of the category. This way, theconsumer is attracted by the leader brand of the facing, and detects theprivate brand so includes it as an alternative in the election process of thebrand (Fernández, 2000).

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So:

H1. Private Brands have, at least, equal length of facing than Manufactu-rer’s Brands, leaders of their category products.

H2. Private Brands have, at least, equal privileged position, in the facingthan Brands of Manufacturers, leaders of their category products.

About the importance of the packaging it is perfectly explained by GivenLeathers in its article about the perception of quality by the consumer in theelection of a product with Private Brand vs. Brand of Manufacturer:

“The consumers see that the packaging has equal quality than thebrand of manufacturer. That stimulates them to try it. And when theconsumer has tried the product of Private Brand, finds out an equal orhigher quality to that of the Manufacturer’s Brand” (Leathers, 2002)

The quality of the packaging of the Private Brand is perceived, by theconsumer, as very similar to that Manufacturers Brand. (Puelles, 1991)

The most informative packing, many times, are a very valid ally in thedevelopment of Private Brands. This aspect is still little prominent in Spain andstill less perceived by the buyers. The design of the packaging and the labelingdepend on the project of the manufacturer that carries out it and, above all, isaccording to the built up of image of the distributor”. (Puelles, 1991)

Among the most positive attributes detected in Private Brands, are: theprice (70 %) and the quality (20 %). On the opposite, in the negative sidewe have: scarce assortment (23 %) and the kind of packaging (23 %).(Puelles, 1991)

H3. The packing of food products in Private Brands is, at least, as attrac-tive as the Brands of Manufacturers, in the judgment of the buyer-consumer.

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Professional and academics cite, as evidence, the growth of utilization ofnew discount concepts in exchange to obtaining a greater space in the facing(Chu, 1992; Lariviere & Padmanabhan, 1997; Shaffer, 1991), the waves ofpromotions to the distribution channel (Gerstner & Hess, 1991; Lal, 1990;Lal, Little, & Villages-Boas, 1996), and the proliferation of Private Brands.

The cycle of a Private Brand can be synthesized in:

• Analysis of the assortment. • Internal Communication. • Selection of products and manufacturers. • Determination of qualities. • Adequate Price. • Good distribution and locating. • Definition of logo symbol. • Packaging and adequate labeling.• Advertising and Promotions.• Design of products • Increase of sales.• Greater turnover • Upper benefits.

(Puelles, 1991)

So:

H4. The activities of communication (Posters, Promotions, Booklets, etc.)in the point of sale, carried out by Private Brands have, at least, thesame intensity that them carried out by them Brands of Manufactu-rers. (Hoch, 1996)

Hipothesis corroborationTo corroborate the hypothesis exposed, our investigation has been carriedout on the basis of the periodic study that on Private Brands is done by the

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Departament of Comercializacion e Investigación, Universidad Complu-tense of Madrid, under management of Professor JA Puelles, the last wave– 16th has been utilized, pertaining to 2.003 (the field was carried out fromNovember 25th to December 10th of 2.003). For the present investigationhimself had had to work with 141.600 data, from the mentioned wave 16.

Geographically, this paper has been in the Autonomous Community ofMadrid (more concretely at territory that covers the area Nielsen: Metro-politan Area of Madrid).

As already mentioned, we are going to refer ourselves always to foodproducts and beverages.

H1. Private Brands have, at least, equal length of facing than Manufactu-rer’s Brands, leaders of their category products.

Great quantity of authors, as we have been able to verify along the pre-sent document, have referred to the priority that the distribution compa-nies give to their brands, in the facing.

We have separated the brands called “First Price” in our analysisbecause, without entering the polemics about if they are Private Brands ornot (for us they are), its behavior is very peculiar, even considering themprivate brands, since in this case, they have a character that could be con-sidered defensive with regard to the private brand.

If we observe the room that occupies each brand in the facing and weclassified it in 3 groups: more than 1/3, equal to 1/3 or less than 1/3, andin the other hand we consider: Private Brands, Manufacturer Brands andFirst Price, we can notice that Private Brands have the largest distributionof the space with a 48.5 % vs. a 20 % of the lenght of the facing that wasdedicated to Manufacturers Brands. Being the 15 % the weight that hadthe First Price brands.

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I mean that for each private brand that enjoys this privileged positionof the facing, there exists 0.6 that occupy less facing, this relationship forManufacturers Brand is of 1 out of 3 (2.9).

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CHAINS> 1/3 = 1/3 < 1/3 TOTAL > 1/3 = 1/3 < 1/3 TOTAL > 1/3 = 1/3 < 1/3 TOTAL

Auchan 42,75 22,41 34,84 100,00 20,95 25,84 53,21 100 11,24 25,44 63,31 100Carrefour 36,73 20,76 42,51 100,00 13,43 14,53 72,04 100 14,35 15,76 69,88 100Eroski 48,70 46,96 4,35 100,00 15,34 51,99 32,67 100El Corte Inglés 35,54 26,89 37,57 100,00 19,99 19,19 60,82 100Hipercor 46,12 17,18 36,71 100,00 12,11 19,90 67,99 100Mercadona 56,71 27,89 15,39 100,00 21,39 30,31 48,30 100Champion 38,83 23,74 37,43 100,00 20,81 23,46 55,73 100 18,82 17,35 63,82 100Caprabo 24,24 26,05 49,71 100,00 15,90 21,63 62,46 100DIA 65,02 16,24 18,74 100,00 39,61 26,03 34,36 100Hiper/Supersol 33,60 29,26 37,14 100,00 19,49 20,73 59,78 100Consum 60,61 19,87 19,53 100,00 38,48 28,74 32,78 100Plus Superdescuento 54,44 19,31 26,25 100,00 44,44 33,33 22,22 100Lidl 84,93 6,62 8,45 100,00 67,77 7,44 24,79 100

TOTAL 48,52 21,32 30,16 100,00 19,97 21,86 58,17 100 15,42 18,09 66,49 100

PRIVATE BRANDS MANUFACTURER BRANDS FIRST PRICE BRANDS

Table 1. Distribution of the Facing space, depending of if it occupies more, equal or less than 1/3 (in %)

Graphic 1. Share (%), by chain, of brands with 1/3 or more of the facing100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Aucha

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Carrefo

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Erosk

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El Cor

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Hiperco

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Merc

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Champio

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Caprab

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Hiper/S

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Consu

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Plus S

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TOTALES



H2. Private Brands have, at least, equal privileged position, in the facingthan Manufacturer Brands, leaders of their category products.

To answer the question that we have just formulated, we are going tokeep in mind two different situations. Firstly, we will consider what we aregoing to call permanent elements, which are the places where the productsare settle permanently or semi-permanently and, under the point of viewof the merchandising, these positions are known as:

– Ceiling, maximum height. Upper part of the facing.– Height of the eyes. – Height of the hands.– Floor.

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CHAIN

PB MB PB MB PB MB PB MB PB MF

Auchan 5,2 17,1 30,6 27,6 51,4 33,6 12,7 21,7 100,0 100,0

Carrefour 8,5 14,5 62,1 22,7 23,6 37,5 5,8 25,3 100,0 100,0

Eroski 25,6 12,7 46,7 26,9 19,0 37,7 8,7 22,8 100,0 100,0

El Corte Ingles 29,5 13,7 56,5 22,6 9,7 38,2 4,3 25,5 100,0 100,0

Hipercor 8,5 16,1 53,3 22,3 28,3 39,8 9,9 21,8 100,0 100,0

Mercadona 7,6 13,7 29,5 30,6 41,2 39,5 21,7 16,1 100,0 100,0

Champion 11,9 14,6 53,7 24,5 24,9 35,6 9,5 25,3 100,0 100,0

Caprabo 3,4 6,0 34,1 27,7 42,5 39,8 20,0 26,5 100,0 100,0

Dia 6,8 7,7 24,2 28,6 33,8 32,8 35,2 30,9 100,0 100,0

Supersol 4,4 9,2 49,5 19,7 34,5 44,7 11,6 26,4 100,0 100,0

Hipersol 1,5 11,1 79,5 32,7 12,1 34,6 6,8 21,6 100,0 100,0

Consum 6,2 8,5 31,9 24,7 41,8 39,6 20,1 27,2 100,0 100,0

TOTAL 9,2 12,5 41,8 24,8 32,1 37,8 16,9 24,9 100,0 100,0

CELING EYES HANDS FLOOR TOTAL

Table 2. Share (%) of special merchandising elements MB vs PB



And secondly there are those elements with an objective more ephemeralcontinuity objective and with a promotional character, we are referring to:

– Gondola end.– Towers or Islands.– Chimneys.– Others.

The presentation in block: we recall the position that in some of thelargest outlets milk can occupy, where the product is shown in units orboxes/displays of several units.

The most coveted position is occupied, clearly by Distribution Brands,almost the 42 % vs. 25 % of Manufacturer Brands.

On the other side, we have the Manufacturer Brands banished to moreunfavorable positions as the ceiling or the floor.

First Price Brands are usually located at floor level and, as second choi-ce, at hands height (contrasting with Private Brands, located at highestlevels, as expected according to the doctrine).

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CHAIN CEILING EYES HANDS FLOOR TOTALAuchan 5.4 6.3 37.2 51.1 100Carrefour 5.7 6.9 13.8 73.6 100EroskiEl Corte InglésHipercorMercadonaChampion 14.3 8.6 5.7 71.4 100CapraboDiaSupersolHipersolConsumTOTAL 6.4 6.7 28.1 58.8 100

Table 3. Share (%) elements of special merchandising elements of FPB

Referring to the main promotional elements we have:



In general terms, among these elements we can see a equilibriumamong Manufacturer Brands and Private.

Manufacturers beat the limitations that they find in facing roombuying these elements.

In the distribution world, these elements are marginal incomes in theirP&Ls.

Concluding, we can affirm that Chains, not only dedicate more facingroom to its brands, but besides they occupy the optimum positions of it.

H3. The packing of food products with Private Brands are, at least, asattractive as the Manufacturer Brands, in the judgment of the buyer-consumer.

For this phase of the investigation the information that has been usedis the one collected in the before mentioned study, in its wave number16. Here there are collected opinions about if the packaging of eachcategory of product is considered better, equal or worst than the LeadersBrands.

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CHAINGondola End island Chimneys otras Gondola End island Chimneys otras Gondola End island Chimneys otras

Auchan 1,99 8,64 3,65 85,71 8,94 4,47 2,76 83,84 7,04 14,08 2,82 76,06Carrefour 21,40 6,84 25,18 46,58 15,54 5,40 30,49 48,57 12,97 7,57 35,68 43,78Eroski 4,39 7,02 88,60 0,00 2,01 6,59 91,40 0,00El Corte Inglés 7,42 12,64 7,97 71,98 9,93 17,25 8,84 63,97Hipercor 42,86 19,48 35,06 2,60 36,36 29,70 32,12 1,82Mercadona 26,10 5,02 5,02 63,86 14,83 1,38 3,79 80,00Champion 13,07 6,03 2,01 78,89 11,13 4,96 1,61 82,31 7,48 2,80 0,93 88,79Caprabo 12,58 9,90 2,47 75,05 8,79 17,25 1,36 72,60DIA 7,08 0,48 3,75 88,69 6,41 0,46 4,35 88,77Hiper/Supersol 12,65 6,46 13,62 67,26 10,33 9,70 30,64 49,33Consum 100,00 0,00 0,00 0,00 100,00 0,00 0,00 0,00

PlusSuperdescuento 1,08 1,62 0,00 97,30 9,52 9,52 0,00 80,95Lidl 14,32 3,40 34,95 47,33 18,75 0,00 18,75 62,50TOTAL 12,71 5,41 11,95 69,93 11,12 8,87 17,45 62,57 10,19 7,44 19,01 63,36

PRIVATE BRANDS MANUFACTURER BRANDS FIRST PRICE BRANDS

Table 4. Support to Merchandising



In general terms, we can affirm that the perception of the buyerstoward the quality of the packing is equivalent for Private Brands orManufacturers, due to the 61.2 % of them were perceived as equals.

By Chains, packaging of Carrefour’s products are considered very clo-se to the leader brands with 36.7%, being this Chain, Carrefour, the onethat shows more favorable results.

What we have is that the product packaging of Private Brands are asgood or even better in a 71.1 %. With this our hypothesis would be alre-ady corroborated, although given the age of them, we suspect that maybein Private Brands (without considering White Brands) factor time mayhave influenced this phenomenon, that is why we decided to review thedata of the 14th and 15th wave where own brand packaging were conside-red equal than the leaders ones by the 5.4% (year 2001); 6.9% (year2002) and 9.9% (year 2003) in the last wave.

We can see a clear shift of opinions in favor to Private Brands packa-ging, the “worse” considerations remain more or less the same and, in

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CHAINBetter than

leaderEqual than

leaderWorst than

leaderBetter than

leaderEqual than

leaderWorst than

leaderAuchan 5,5 77,2 17,4 0,6 61,1 38,6Carrefour 36,7 20,8 42,5 3,0 47,8 50,7Eroski 6,1 18,3 75,7El Corte Inglés 5,7 76,6 17,8Hipercor 2,9 84,1 13,0Mercadona 5,5 74,2 20,2Champion 8,8 71,3 20,0 1,0 51,8 47,7Caprabo 2,0 72,0 26,0DIA 3,5 63,5 33,0Hiper/Supersol 4,8 56,2 39,0Consum 5,5 75,0 19,5

PlusSuperdescuento 4,3 52,2 43,5Lidl 15,8 64,7 19,5TOTAL 9,9 61,2 28,9 1,9 51,8 47,2

PB FPB

Table 5. (%) Packaging evaluation of Private Brands and First Pricevs. Manufacturer Brands



packaging considered “equal”, as time goes by they get better than theones of Manufacturer Brands. (We should understand for packaging qua-lity the attraction that the consumer perceives from it).

Therefore we can say that Private Brands have their packaging slightlymore attractive than leader brands and that as time goes by that differen-ce in their favor will be increased.

With this our third hypothesis is corroborated.

H4. The activities of communication (Posters, Promotions, Booklets, etc.)in the sales point, carried out by Private Brands have, at least, thesame intensity than the ones carried out by Manufacturers. Brands

Finally, we will study another of the essential elements of the commu-nication in the point of sale, the material of merchandising: POS (Point OfSales Materials), etc.

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Graphic 2. Quality Perception of the PB packaging vs. the leader

2003

2002

2001

AÑO

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%



For our goals, we have grouped all these materials in the followinggroups:

– Booklets– Posters– Advertising in the sales point.– Tasting – Others

There are not significant differences, and if there are, they are infavor of the Private Brands, related to materials more properly of mer-chandising actions. But it is the opposite when we are considering thoseelements which are closer to Advertising (Booklets and indoor adverti-sing – in the store-) where the difference is favor of ManufacturerBrands: booklets 66.4% vs. 33.3 % and indoor advertising 56.6 % vs.11.0 %. Something no astonishing, if we considering that as defensiveactions used by manufacturers to fight against to the prepotency of Pri-vate Brands in the facing.

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CHAIN

PB MB FPB PB MB FPB PB MB FPB PB MB FPB PB MB FPB PB MB FPBAuchan 0,0 100,0 0,0 72,7 27,3 0,0 26,4 66,0 7,5 0,0 90,9 9,1 0,0 90,6 9,4 23,6 7,9 68,6Carrefour 30,0 66,7 3,3 36,1 49,4 14,5 49,4 23,9 26,7 50,0 33,3 16,7 35,1 51,2 13,7 26,3 69,1 4,5Eroski 0,0 0,0 0,0 50,0 50,0 0,0 36,8 63,2 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0El Corte Inglés 91,7 8,3 0,0 100,0 0,0 0,0 100,0 0,0 0,0 100,0 0,0 0,0 100,0 0,0 0,0 24,9 75,1 0,0Hipercor 0,0 100,0 0,0 0,0 100,0 0,0 0,0 100,0 0,0 0,0 100,0 0,0 0,0 100,0 0,0 20,3 79,7 0,0Mercadona 71,4 28,6 0,0 0,0 0,0 0,0 83,7 16,3 0,0 100,0 0,0 0,0 71,4 28,6 0,0 57,3 42,7 0,0Champion 27,6 72,4 0,0 2,8 41,7 55,6 51,8 31,5 16,7 0,0 100,0 0,0 66,9 19,7 13,4 24,2 70,1 5,7Caprabo 26,7 73,3 0,0 10,0 90,0 0,0 46,2 53,8 0,0 0,0 100,0 0,0 37,5 62,5 0,0 24,3 75,7 0,0DIA 61,9 38,1 0,0 61,9 38,1 0,0 67,1 32,9 0,0 100,0 0,0 0,0 67,1 32,9 0,0 60,5 39,5 0,0Hiper/Supersol 6,3 93,8 0,0 8,3 91,7 0,0 81,5 18,5 0,0 25,0 75,0 0,0 59,9 40,1 0,0 29,4 70,6 0,0Consum 0,0 0,0 0,0 0,0 0,0 0,0 33,3 66,7 0,0 0,0 0,0 0,0 42,1 57,9 0,0 41,2 58,8 0,0PlusSuperdescuento 0,0 0,0 0,0 0,0 0,0 0,0 53,8 46,2 0,0 0,0 0,0 0,0 33,3 66,7 0,0 85,1 14,9 0,0Lidl 100,0 0,0 0,0 100,0 0,0 0,0 95,2 4,8 0,0 100,0 0,0 0,0 86,7 13,3 0,0 88,5 11,5 0,0TOTALES 33,3 66,4 0,3 32,4 56,6 11,0 54,2 36,8 9,0 45,7 47,8 6,5 55,6 38,2 6,1 36,2 56,9 6,9

BOOKLETSADVERTISING POINT OF

SALES POSTERS TASTING OTHERS SIN PROMOCION

Table 6. Elements support of Merchandising used by PB, MB and FPB



MethodologyFor the development of our investigation, we have based ourselves on thePrivate Brands Laboratory that carries out the Department of Commer-cialization and Market Research in University Complutense of Madrid,whose characteristics are:

1. Geographical Area: Madrid metropolitan area, in Nielsen termino-logy, and referred to the Food and Beverages sector.

2. Field Works date: All and each one of the last years, in the last daysof the month of November and the first days of December.

3. Chains investigated: Alcampo (Auchan), DIA, El Corte Inglés,Hipercor, Eroski, Champión, Carrefour, Caprabo, Comsum, Mer-cadona, Supersol/Hipersol, Plus Superdescuento y Lidl.

4. Universe: Metropolitan Area of Madrid, representative in popula-tion, available income and sale of Private Brands over the total ofSpain.

5. Sample: Hypermarkets, investigating the totality of its stores, andsupermarkets, in which a fully representative sample is analyzed toget a significant statistical level.

6. Questionnaire: it is made of two parts: About products and aboutbuyers. Data are collected about manufacturers, price, packaging,promotion, placement, place in the facings and kind of promotio-nal activities. About the section of buyers, the data are collected ina eminently quantitative way and referred to motivations, habitsand attitudes.

7. Sample characteristics:

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Error 3.28 % with confidence Interval 95.5 %

ConclusionsThere are three fundamental topics in modern label brands in Spain:

• Competitiveness• Growth and • Concentration

With great profusion has been emphasized how the owners of PrivateBrands did not renounce to actions of marketing, similar to those used bythe brand leaders. Though it is true that with a different “marketing mix”

The distributor with own brand should carry out a merchandising acti-vity which increases the sales and margin, without renouncing to the busi-ness of brand leaders.

Private Brands have, at least, equal length of facing than Manufactu-rer’s Brands, leaders of their category products.

Private Brands have, at least, equal privileged position, in the facingthan Brands of Manufacturers, leaders of their category products.

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CHAIN Nº STORES SAMPLECarrefour 16 13DIA 369 32Champion 30 14Caprabo 64 18Hipercor 8 5El Corte Ingles 7 7Alcampo 11 5Super/Hipersol 47 17Mercadona 29 10Consum 14 3Eroski 2 1

PlusSuperdescuento 25 3Lidl 36 15TOTAL 658 143



In general terms, we can affirm that the perception of the buyerstoward the quality of the packing is equivalent for Private Brands orManufacturers, due to the 61.2 % of them were perceived as equals.

The activities of communication (Posters, Promotions, Booklets, etc.)in the point of sale, carried out by Private Brands have, at least, the sameintensity than the ones carried out by Manufacturers Brands.

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