Year of Graduation
Evaluation of the private labels efficiency in Russia.
Faculty of Management
Private labels are brands owned, controlled, and sold exclusively by a retailer (Raju, Sethuraman and Dhar 1995). The main reason behind the research focus on private labels is the worldwide increasing market share of retailers’ brands. The purpose of the study is to create a methodology for retailers to analyze private label efficiency by evaluating consumer and retailer driven factors for the evaluated private label new launch.The objectives of the research can be summarized in the following points to evaluate its peculiarities in two different retail environments – FMCG retail market and pharmacy channel, to conduct an online survey of consumers’ attitude towards private labels, to conduct series of interview with top management of key Russian retail chains, to check the research questions and hypothesizes, to create a tool for analysis of private label launch efficiency based on survey and interview assumptions; From the online survey of consumers it has been revealed that overall the respondents understand what private label is, but these kinds of products are consumed a bit less often than national brands. Moreover the most obvious channels for private labels still are hypermarkets, supermarkets and discounters. In addition to that private labels in case of good proposition increase cross-category private labels consumption and overall respondents agreed that they come more often to the store in case they like the private labels quality and assortment. Several interviews with the top Russian retail chains top managements representatives has shown that the attitude towards the private labels and the KPIs that have been submitted before private labels launch (but for the better margin) differs by retail environment and within the same retail environment also. To effectively control the process of private label launching, to monitor the feedback of such process and to improve the efficiency of private labels and the retail chain in general the tool for evaluation is needed.Several attributes that should be evaluated before private label launch have been assumed after consumers’ survey and retailers’ interviews. Some of them are retailer driven (Relevance for retailer’s brand, Benchmark share, Exclusivity of the product), other – consumer/shopper driven (Perceived risks, the price consciousness, level of trust to the retailer\private label) and the rest are driven by product specifics itself (Turnover of the product / category, Margin level, Easy to launch). Moreover according to the survey and interviews some parameters are more important than others.According to this attributes private labels new launches could be evaluated as in the summary of the research an easy and simply visualized tool of private labels launches evaluation that could be used by private labels managers of the retail chain for their internal needs and for presentations to their top management is proposed. Moreover this tool could also be used for manufacturers to present their future retail private labeled products during the tender period in order to differentiate their proposal from other manufacturers and in order to make the decision making process for retailers easier.