Nowadays, dynamic changes of customer preferences and ever-growing requirements are driving the transformation in the structure of retail sales. Consumers put more and more pressre on shopping convenience of low pricing of products, often willing to pay a premium only for the opportunity to stand out in their social circle (brand purchases). Such changes in the consumers’ approach increase Internet purchases and discount stores shopping share in the customer shopping preferences. The latter are now competing with each other over the leadership in the “best quality for lowest price” race. This phenomenon may also be observed in the agrochemical and biocides industries.
Most of the retailers want to promote its brand of reliable supplier of good quality products in best price and introducing private-label products seems to be the most effective way to do it. This approach allows suppliers to gain the following benefits:
1.Strengthening the relationship with the end-user.
Promoting your own producer brand with private-label offering creates a direct connection with the customer. Adequate mix of advertising and delivering a quality products should eventually result with a customer “product pull” thus leading to a competitive advantage against market peers.
2. Creating an umbrella brand enables easier expansion of private-label portfolio with low marketing expenditure.
Developing umbrella brand allows to lower marketing expenses of particular products whilst promoting the producer brand. Each reliable low priced product added under umbrella will extend the brand reach and strength.
3. Competitive advantage during economic slow-downs.
Research shows that customers tend to turn their attention to lower priced products especially during periods of financial instability. Private-label products offering decent quality for low price is the prime choice for most of the money conscious consumers. Lots of research show additionally that many consumers that switched to cheap value products during economical downturn tend to stay with them even after the bad period is over.
The main obstacles that suppress the development of private-label brands are as follows:
- Relationship with current suppliers of brand products.
- Lack of know-how in production.
- Financial requirements.
The above mentioned obstacles seem to be hard to overcome but with support of experience partner providing comprehensive tolling service those may be mitigated.
It is hard to deny that currently end-user preferences are co-formed not only by marketing campaigns of global corporations but also by the last entities in supply chain i.e. shops and distributors. Even the big mutlinational brands has to relay on support of the latter to distribute their goods and their sales are very much dependent on the will and dedication to market and advertise their products. It seems that the slow degradation of huge multinational brands and strengthening of private-labels is inevitable and is actually already pretty much evident in FMCG sector.
Second barrier for creating producer brands is lack of know-how and production plants. This issue is not as serious as it seems since nowadays there are plenty of companies that are specialising in delivering comprehensive tolling services under the client designs. KJJ Consulting Group provides its Clients with comprehensive production services tailor-made for their needs. Asset-light business model is shown to be not only sustainable but also very profitable due to a decrease in fixed costs and ability to quickly expand and contract your own output by cooperating with several manufacturers.
One of the main concern withholding the private-label brand introduction is the financial expenditure connected to it. It is more often than not over exaggerated and promotion of private-label may be done with an appropriate mix of trade marketing and direct marketing by trained sales force. In addition to this – each litre and kilogram of own product sold will enhance reliability of your producer brand.
In KJJ Consulting Group opinion – establishing and promoting producers brands in the umbrella brand – private-label business model will surely enhance competitive position of every company and will enable to distinguish itself over the competitors. Developing private-label brand is also a great way to suppress dominant position of multinationals and huge local suppliers.
KJJ Consulting Group provides comprehensive business development services in the field of agrochemicals and biocides. KJJ Consulting Group’s experts provide a complex solution starting from concept phase, through obtaining necessary permissions and production of the final “ready-to-sell” products. Our approach enables our Clients to significantly decrease financial expenditures necessary to implement new products as well as spare valuable employees time. With KJJ Consulting Group assistance our Clients may take part in highly regulated segments of crop protection products and biocides as a registrations holder and not merely a “middle-man” for multinational corporations and huge national producers.