The Positioning of Premium Private Label Brands

ABSTRACTThis paper examines whether New Zealand consumers' perceive Premium Private Label (PL) brands as occupying the same perceptual space as established National brands in FMCG markets. The methodological approach involved the use of Kelly's Repertory Grid to elicit attributes for brand evaluations and discriminant analysis to graphically demonstrate the brands' relative positions. In four product categories, the positioning of a Premium PL brand 'Select' was compared to that of two National brands and a budget PL brand, using on-line surveys. In none of the categories was 'Select' perceived as occupying the same perceptual space as the established National brands, though it was clearly differentiated from its budget counterpart. The findings indicate that, while Premium PL brands such as 'Select' may never threaten the market position of a dominant National brand, they could compete for the position currently held by weaker National brands in some product categories.Keywords: Private Label brands, Brand Positioning, Brand Attribute Elicitation, Kelly's Repertory Grid, Discriminant Analysis.1. INTRODUCTIONIn New Zealand, Private Label (PL) brands' share of FMCG markets has grown from 10% in 2002 (Coriolis Research, 2002) to 18% in 2009 (AC Nielsen, 2011). This PL brand growth reflects a global trend, although the rate of adoption of PL brands varies between countries and New Zealand's figure is well below that of some other Western economies. For example, PL brand consumption is 46% of FMCG sales in Switzerland, 42% in the United Kingdom, and 28% in France (AC Nielsen, 2011). As a result of this growth in PL brands, competition between PL brands and National brands has intensified. In particular, the decision by retailers to introduce new Premium PL brands has altered the FMCG landscape. More PL brands fill the shelf space previously dominated by National brands. Previously, Economy PL brands were typically placed in the supermarkets' less desirable lower shelves. Nowadays, Premium PL brands occupy the optimal eye-level shelf spaces, alongside the leading National brands. In some categories it is the weaker National brands that now occupy the lower shelves. Consequently, the Premium PL brands' packaging and price differential are more obvious to consumers.Clearly, in New Zealand supermarkets these new Premium PL brands and National brands are competing for the same 'perceptual space' in consumers' minds. Eye catching packaging, eye-level shelf placement, similar pricing in some categories and brand names such as 'Finest' are used to imply Premium PL are quality products (Nenycz-Thiel & Romaniuk, 2010). However, even if consumers do perceive the physical improvements in Premium PL brands, thus far little research has examined whether these perceptions are transferred to a Premium PL brand's overall quality perceptions (Sayman, Hoch & Raju, 2002). While, Nenycz-Thiel and Romaniuk (2010) determined that consumers do perceive quality differences between Economy (Budget) and Premium PL brands, where consumers position Premium PL brands in comparison to National brands has not been established (at least not in reported studies). Given the growth in Premium PL brand penetration, the success or failure of Premium PL positioning strategies has potentially profound implications for manufacturers and retailers in the FMCG environment. As the competition between manufacturers' brands and retailer brands intensifies, it becomes more important for adjusting marketing communications to know where these brands are positioned. However, establishing a brand's position based on share of category sales does not determine what attributes consumers use to position the brands; establishing brand positioning from a consumer's perspective is much more helpful.The research reported here was designed to test the extent to which one Premium PL brand has achieved the goal of positioning itself against established National brands and its cheaper counterpart in the minds of New Zealand grocery shoppers. …