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Marketing Matters: Private Label Grows Up

By: Donna C. Barson
Posted: February 11, 2008, from the February 2008 issue of GCI Magazine.

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It’s not only CVS and Walgreens that see merit in private and exclusive labels. Drugstore rival Rite Aid has stated that it intends to emphasize personal care for two reasons: value provided to the customer and higher margins for Rite Aid.

How have private labels become such a player in the retail marketplace? Obviously, a rise in quality has been a major consideration. Additionally, innovative packaging, advertising and various promotions help to attract consumers.

And whereas much private label packaging used to resemble a paper towel drawn on by a kid’s crayon, private label packaging today is eye-catching and appealing. Private label marketers understand that packaging is the first place consumers interact with the product, and they’re not shy about putting their best foot forward at the point of purchase.

Who does this private label challenge impact the most? Major personal care products, despite some hiccups along the way, are not going anywhere. However, what is going to occur is that the “in-betweens”—those products that don’t have major brand clout—are going to find themselves squeezed, perhaps right out of existence. There are so many new personal care items on store shelves every year, and the math shows that something’s got to give. Some estimate that private label brand growth for personal care will increase 25% in the next decade. There’s only one place for all those new private label products to go—brand marketers’ shelf space.

So what’s a marketer to do? A few things come to mind:
1. Continually analyze and get intimate with your customer base. Anticipate rather than react. By offering customers something that they want and private labels do not offer, marketers increase the likelihood of premium shelf space.
2. Start or improve upon a loyalty program that rewards your customers for product use.
3. Market, market, market. Make certain that your customers know why they should buy your product/brand over a private label. Make customers seek out your product.
4. Establish toll-free numbers, hot lines, Web sites and anything else needed to give your customers instant access to you. Make them feel you’re right next door.