Success with own brands

Multiple crises, inflation and the rising cost of living are forcing many consumers to continue to conserve their household budget. A GRP comparison of 15 countries in Europe shows that 93% have already changed their shopping behaviour.

Even if the mood is currently brightening again somewhat, reaching for the cheaper private label remains one of the most common savings measures. In order for the private label to remain relevant, it needs more than just price differentiation.

It is no longer enough to think solely from a category perspective and fill possible shelf gaps with favourable brand alternatives.

No, brands and, of course, own brands that recognise and understand the tasks people face in their everyday lives are of particular value and are more likely to be commissioned. “Food for Future” from Penny, “Naturtalent” from toom, #innerbeauty from Douglas not only do their jobs very well on a functional level, but also on an emotional and social level.

valyu, with its human-centred approach, has developed and implemented a large number of private labels since it was founded, which are permanently commissioned by many people in everyday life.

Here we briefly describe what the private label is all about, from its beginnings to the present day:

It all began in the 70s with the growing success of the discounters. Aldi and Lidl focussed entirely on private labels and dispensed with the usual advertising measures. The result: cheap products at an acceptable quality level. The second result was that traditional food retailers had to react to the success of the discounters, which began in the 1970s with the growing success of the discounters. Aldi and Lidl focussed entirely on private labels and dispensed with the usual advertising measures. The result: cheap products at an acceptable quality level. The second result: traditional food retailers had to react to the success of the discounters. With its own private labels such as Gut & Billig, Attraktiv & Preiswert or Ja!.
Private labels also quickly became a hit in food retailing – and revealed even more advantages for the respective company:

• The pricing policy for own brands could be organised much more freely.
• Sales and margins increased significantly.
• The product range could be differentiated in a more targeted manner.
• Thanks to the broad-based brands, budgets could be bundled and communication could be based on a few simple messages.
• Customer loyalty grew and the (at best) positive brand experience radiated to the entire company.

So it was no wonder that the simple private labels quickly became multi-layered own brands. Not just in Germany, but all over Europe.

Own brands become own brands.

While the first own brands were only intended to be good and cheap, the companies soon saw their chance to make more out of the own brands. In a first step, many own brands became copies of branded products. Through design, naming and communication, they became free riders of the A-brands. Brands such as Balea, however, quickly became much more than that. They became genuine brand alternatives. And the development continues.

The trend is towards differentiation into different brand types. This is because an increasing differentiation of own brands can cater more strongly to different customer needs.

In addition to classic entry-level price brands and now established premium and organic brands, specific segments such as veggie, to-go, regional, lactose-free, climate-neutral, etc. are becoming increasingly important. And their success proves them right.

Market share of private labels in Germany by product group in 2021

The success of own brands also has its downsides. The market is now flooded with countless brands, which are consequently hardly distinguishable from one another. We have already seen that, from a retail perspective, there are three main reasons for own brands:

1. return on investment
2. differentiation
3. customer loyalty

But differentiation and customer loyalty simply no longer take place if everyone offers the same thing.

However, the biggest problem with many current private labels is a completely different one: Own brands are often developed from a category perspective. The question is asked: Which product ranges can be filled and how? What then emerges is just a little sister of the A brand. And not a real consumer brand!

For this, completely different questions need to be asked. After all, own brands also need a brand image:

• In what competitive environment is the brand positioned?
• How does the brand want to distinguish itself?
• In which price segment does the brand operate?
• What product range effects should it trigger?
• Which content-related reference points should the brand serve?

The key question, however, is:
What requirements do customers have of the brand?
Because only a brand that answers this question can offer a genuine brand experience.

Which characteristics do you associate more with private labels and which with manufacturer brands?

Valyu is one of the leading agencies for the development and implementation of private labels in Europe. Why? Because we understand what it’s all about. At its core, it’s not about filling product ranges or categories. It’s not even primarily about products or services. It’s about customers. And it’s about jobs-to-be-done!

When people buy a product or service, they do so in order to complete a task/job.

An example of these jobs-to-be-done: I go to the car dealer and buy a fancy electric car. And not because I want a fancy electric car, but because it does several jobs for me at once.

On a functional level, it helps me to get from A to B. On an emotional level, I like the look and feel of driving. And on a social level, it is important to me to act sustainably and to show this to the outside world.

Understanding these three levels is essential in order to develop products – or private labels – that customers actually need. And in a sustainable and long-term way. This realisation is an important part of success. Another is the user experience.

DKno own brand without user experience

A pretty logo does not a successful brand make. So far, so clear. Nevertheless, far too many companies still rely on traditional branding elements. But in the digital age, how customers experience brands is more important than ever.

Today, they are no longer simply satisfied with what brands put in front of them. They want the best experience across the entire customer journey. This includes the purchasing process as well as the use of products and services.

This raises the key question for brands: how do you fulfil these wishes and how do you design the user experience to strengthen and differentiate your brand?

Keeping an eye on the user experience helps to ensure lasting positive user experiences and promotes customer loyalty. Of course, this requires finding out how consumers experience the brand and what can be done to positively influence these experiences.

Own brands are store brands

So much for the development and implementation of private labels. But the private label alone cannot do everything. Added value must also come from the store. After all, people go to DM, not Balea.

Therefore, as an additional step, the image of the store brand and the own brand must be harmonised during the development of the own brand. In other words, what added value can the company offer to the brand in order to generate a positive image transfer. For example: extended right of exchange, longer guarantee, discount for participants in the loyalty programme, availability guarantee in the stores, etc.

valyu also offers opportunity/risk analyses and helps to implement the process.

We do private labels differently. Not from a category perspective, but from a customer perspective. We focus on the user’s jobs-to-be-done. And consider the user experience throughout the entire customer journey. In the strategy phase, we follow the double-diamond design process.

We offer the following services in the solution room:

Our national and international customers usually use the following valyu services when developing and implementing their own brands:

Analysis and evaluation

• Analysing the image and brand positioning of existing own brands
• Market and design research
• Analysing the target group
• Customer-Insights
• Competition analysis
• Review of own brands in the respective product ranges (review and evaluation of existing elements, name, packaging and communication check)
• Structured and fully organised workshops

Strategic consulting

• Recommended structure for optimisation
• Decision on brand mechanics as a systemisation instrument (e.g. umbrella or segment brand, etc.)
• Analysis of expansion options/ideas (additional product groups, new segment, distribution channels)

Creative creation and design

• First visualisation of own brands (names, packaging, POS)
• Development of name, logo, packaging and POS guidelines
• Creation of sales materials (manual/sales presentation with product and marketing-related components)
• Development and implementation of digital, print and moving image communication measures

Communication and touchpoints

• Development and implementation of holistic communication strategies
• Creation and optimisation of online presences, landing pages and websites
• Design and implementation of social media campaigns, influencer marketing and content marketing
• Conception and implementation of digital marketing campaigns (e.g. search engine optimisation, search engine marketing, display advertising)
• Production of high-quality moving image content

Continuous KPI-based monitoring and controlling

• Ongoing EM controlling (jour fixe meetings with Category, Purchasing, Sales)
• Use of data-driven approaches to measure effectiveness and continuously optimise communication measures

Do you need a proof of concept? Here is a selection of brands developed and implemented nationally and internationally by valyu:

Customer: toom
Brand: DIY store

Customer: Penny
Brand: Food

Customer: JUMBO
Brand: E-Tools

Brand: High Colorado
Brand: Fashion

Customer: Markant
Brand: Pet-Food

Customer: Conrad
Brand: Elektronik

Customer: Markant
Brand: Drogerie

Customer: real
Brand: Drogerie

Customer: Bisquiva
Brand: Food

Customer: Conrad
Brand: Elektronik

Customer: JUMBO
Brand: Automotive

Customer: toom
Brand: Bau

Customer: JUMBO
Brand: Bike

Customer: Griesson de Beukelaer
Brand: Food

Customer: JUMBO
Brand: Dekoration

Customer: real
Brand: Discount

Customer: Arena
Brand: Discount-Baumarkt

Customer: toom
Brand: Discount-Baumarkt

Customer: Aldi Suisse
Brand: Discount

Customer: High Colorado
Brand: Fashion

Customer: IVT
Brand: Elektronik

Customer: JUMBO
Brand: Garten

Customer: toom
Brand: Dekoration

Customer: Aldi Süd
Brand: Discount

Customer: nmc
Brand: Dekoration

Customer: toom
Brand: Baumarkt

Customer: toom
Brand: Mobilität

Customer: igefa
Brand: Hygiene B2B

Customer: toom
Brand: Nutzgarten

More to come.

Der Status:

Own brands are often developed from a category perspective. How the product ranges could be filled is a frequent question. What then emerges is just a little sister of the A-brand.

The problem:

The three main reasons in favour of own brands from a retail perspective
1. return on investment
2. differentiation and
3. customer loyalty.
But: Reasons 2 and 3 in particular simply don’t work if everyone offers the same thing.

The solution:

Development and implementation of own brands from a customer perspective and not from a category perspective.

Our value proposition:

We do private labels differently. Not from a product range perspective, but the way your customers need and want to experience them.