11 New Strategic Brand Management by Philip Kotler   4th Edition
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11 New Strategic Brand Management by Philip Kotler 4th Edition


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as the
premium brand in some cases\u2019 (quoted in
Marketing Management, July\u2013August 2006).
Tesco is an example of this.
At Tesco, the number one distributor in
Britain, a survey of the fruit juice aisle is
revealing: far from being a product, the
distributor\u2019s brand is in reality a segmented
range, from the lowest possible price (Tesco
Value), priced at s0.33 per litre, to s1.84 for
the top of the range, under the label \u2018Tesco
Finest\u2019. Tropicana\u2019s product, by the way, is
sold at s1.62 per litre.
In fact, distributors are well schooled in
distributors\u2019 brands. They:
I allocate the majority of their shelf space to
them, eliminating all weaker brands;
I have segmented their portfolio of distrib-
utors\u2019 brands in order to meet the different
expectations of their clients (a far cry from
the \u2018Soviet\u2019 own brand, signalling the
absence of choice) without forcing them to
identify with the shop name (Wal-Mart
named its men\u2019s clothing range George);
I segment their range in order to cover not
only different price levels, from the
cheapest to the highest price on the entire
shelf, but also the emerging needs known
as \u2018trends\u2019 (such as Tesco Fair Trade, Tesco
Organic and Tesco Healthy Eating).
The distributor\u2019s brand, managed with
strength and ambition, in this way contributes
to the store\u2019s reputation. However, as we shall
discover below, the brand issue for the distrib-
utors has shifted: the question now is to turn
the store itself into the brand.
Throughout the world, the distributor\u2019s
brand is often becoming the only true
competitor to the producer\u2019s brand, when it is
not the shelf leader in volume. Too many
brand managers have not yet accepted this
reality: their brands are in a minority. Their
enemy is not the other \u2018big\u2019 brand, but the
distributor\u2019s much cheaper products, with an
increasingly comparable quality level. To
make things worse, on hypermarket and
supermarket shelves we find the producer\u2019s
brand, the distributor\u2019s brand and now the
lowest-price products, 60 per cent cheaper.
This further heightens the urgency to act
(Quelch and Harding, 1996) and position the
major producer\u2019s brand firmly and squarely
on its pillars of differentiation: innovation
and quality on the one side, and emotional
added value on the other.
Distributors\u2019 brands occur in all countries,
from the richest and most developed to devel-
oping countries. In Eastern countries, low-
cost products and hard discount are growing
rapidly. However, the hard discounters were
also a bolt from the blue for mass distribution
in the highly developed countries of Western
Europe: their growth in France stabilised only
this year. And yet these are rich countries.
The distributor\u2019s brand is thus not a
phenomenon linked to low income. In
Switzerland \u2013 which has one of the highest per
capita incomes in the world \u2013 the leading food
brand is Migros, well ahead of Nestlé. This is
hardly surprising, as Migros is a dominant
distributor: every village has its own Migros
store. Migros \u2013 without exception \u2013 sells only
Migros products. The citizens of Germany,
Europe\u2019s most powerful country, enjoy their
luxury cars, but they buy most of their food
from the Aldi and Lidl hard discounters,
which also \u2013 almost without exception \u2013 sell
only exclusive private-label products. It is
hard to imagine that the Germans would buy
poor-quality goods. Loblaw\u2019s, a Canadian
chain, has built its reputation on its
President\u2019s Choice brand. The story is the
same at Carrefour, Albert Heijn in Holland
and Ika in Scandinavia.
Distributors now manage their brand port-
folios as part of an overall vision for the
category and for the store. They have to
choose their \u2018brand mix\u2019 for each category
segment, and make a decision with regard to
the type of brand to offer: producer\u2019s or
distributor\u2019s brand? The latter may offer either
ranges of economical products, a value-for-
money line (often in the distributor\u2019s own
name) or own brands (private labels) offering
more flexibility in terms of positioning \u2013
perhaps even genuinely premium posi-
tioning.
It is true that within the meaning of the
catch-all term \u2018distributor\u2019s brand\u2019 there are
distinctions to be made between very
different realities. Two axes give structure to
all the distributor\u2019s products or brands: the
level of value added, and the relation to the
store (see Figure 4.1).
In terms of added value, at the bottom of
the scale are the low-cost products, hastily
designed by mass-distribution multiple
retailers to counter the breakthrough of the
so-called \u2018hard-discount\u2019 German stores (Aldi
and Lidl) and their French counterpart (Ed).
These products are the result of a minimalist
conception of quality: low-cost sardines have
the legal right to be called sardines, but make
no pretence at anything more. Their low price
is obtained through the purchase of the
cheapest sardine lots in fish auctions the
world over. Low-cost gingerbread contains
FROM PR IVATE LABELS TO STORE BRANDS 67
not one gram of honey. This should not be
confused with the business model of the hard
discounters such as Aldi and Lidl, which
established precise quality specifications with
industrialists, aiming to obtain decent quality
despite the rock-bottom prices, via economies
of scale pushed to the extreme: the manufac-
turer recruited will produce only one
reference, in astronomical quantities. At the
other extreme of added value, we find
products such as Tesco Finest, for example
fresh fruit juices made less than three days
earlier and with a limited shelf life (without
preservatives) and Monoprix Gourmet,
which, as its name suggests, offers products
with high experiential value. In the United
States and Canada, the President\u2019s Choice line
from Loblaw\u2019s aims high in terms of quality, as
its name suggests.
In terms of nominal relationship to the
store, a distributor\u2019s brand may either carry the
name of the store or its own name: one or the
other. Thus, at Carrefour, there are \u2018Carrefour
products\u2019, Tex (for textiles) and BlueSky. Of
course, intermediate situations do exist, where
the store endorses its own products: all
Auchan products aimed at children are signed
Rik et Rok, but the Auchan logo is clearly visible
on the front of the packaging.
We thus arrive at the matrix shown in
Figure 4.1. The store does not impose its name
directly:
I when its insufficient reputation is a
handicap for product sales;
I when the badge function of the
consumption does not fit the presence of a
generalist distributor (for example wine or
textiles);
I when the level of added value of the
products is too low and could reflect nega-
tively on the store: for example, at
Carrefour low-cost products are labelled
No. 1 or Eco, without any mention of
Carrefour.
Why do Leclerc hypermarkets have no store
brand with their name? I organised a seminar
on this theme with the managers of this group,
and it appears that this has to do with the
company\u2019s culture and its historical legacy.
Leclerc was conceived and grew up as a
discounter of major brands. Signing its
products Leclerc would not fit with this vision
of the company\u2019s raison d\u2019être. Nevertheless,
customers have clearly realised that Marque
Repère (Marker Brand) is Leclerc\u2019s distributor\u2019s
brand. In this regard it is interesting to note
that this brand is itself named \u2018brand\u2019, and uses
at its second name the ontological function of
any brand: to serve as a reference marker.
68 WHY IS BRANDING SO STRATEGIC?
Tesco Value
Eco Products
No.1
Tesco
Leader Price
Sephora
George (Wal-Mart)
St Michael 
(Marks and Spencer)
Aldi
Lidl
President\u2019s Choice
Added value0%
R
el
at
io
ns
hi
p
 t
o
 t
he
 s
to
re
Fauchon
Tesco Finest
Tesco Healthy Choice
None
Strong
Figure 4.1 Relative positioning of the different distributors\u2019 brands
Other terms