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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The reverse is indif-
ference, or sensitivity to the slightest rise in
price. This engagement comes from two
sources. The first is attachment, measured here
as a strong perception of proximity (the
customer feels a closeness with the brand), and
the second, satisfaction linked to a perception
of difference in product performance.
As Table 4.2 demonstrates, what
engagement with the store brand does is
essentially to create closeness with the store.
The reverse is true for the manufacturer\u2019s
brand: their \u2018fans\u2019 are fans because of a strong
experience of the product\u2019s superiority.
C Terrasse\u2019s doctoral thesis also examines
the consequences of engagement with the
brand. In theory, the more people are engaged
with the producer\u2019s or distributor\u2019s brand, the
less they will seek variety when shopping in
this aisle, and the less sensitive they will be to
the price. This is exactly what happens with the
big brand: repeat purchase of the identical
product results directly from the client\u2019s
engagement with the brand and its reductive
effect on two key factors of disloyalty (enjoying
variety and being sensitive to price). For the
store brand, engagement with Carrefour
certainly influences the repeat purchase, and
certainly diminishes the appeal of variety, but
does not make the client insensitive to the
price. This means that the repeat purchase of
the distributor\u2019s brand is always contingent on
the price: it is highly conditional. These shelves
are now seeing the advent of lowest-price
products. The repeat purchase rate of the
distributor\u2019s brand, although high, is essen-
tially false loyalty (Kapferer and Laurent, 1996):
the customer is always sensitive to the price,
and keeps an eye on price differences on the
shelf. It is not an absolute brand.
Nevertheless there is an interesting difference
in the way a distributor\u2019s brand works,
compared with the manufacturer\u2019s brand. As C
Levy\u2019s research (in Levy and Kapferer, 1996) on
the impact of distributors\u2019 brand trials on atti-
tudes showed, the satisfaction created by a
distributor\u2019s brand increases the credibility of all
the distributors\u2019 brands, at least in terms of
attitude. If a customer tastes Carrefour
chocolate biscuits, which compete with the
segment leader Pepito, and finds them to be
excellent, it increases the possibility that they
will also buy Tesco chocolate biscuits.
This is why distributors\u2019 brands have diffi-
culty creating loyalty to the store, as is often
observed in studies: admittedly they create
repeat purchasers within the store, but they
do not appear to offer discriminating reasons,
or even overriding reasons for visiting one
store over another. Nor does an examination
of the reasons for purchase in people on the
border of the two \u2018regular customer\u2019 zones
find them appearing as the number one
criterion. The distributor\u2019s brand therefore
plays less of a role in differentiating itself from
the competition than the manufacturer\u2019s
brand, which works only for itself. These
results have been shown again in very recent
analyses (Szymanowski, 2007).
This does not mean that all distributors\u2019
brands are perceived to be equal: the image of
the store (quality, cleanliness, popular or
elitist character, and so on) reflects on every-
thing that bears its name, therefore firstly on
the distributor\u2019s brand.
FROM PR IVATE LABELS TO STORE BRANDS 73
Table 4.2 Determinants of attachment to distributors\u2019 and producers\u2019 brands
Carrefour brand Big brand
Satisfaction linked to perceived product superiority 0.161 0.539
Attachment, perceived proximity with the brand or store 0.601 0.236
Source: C Terrasse/J-N Kapferer, 2006 (correlation coefficients)
Why have distributors\u2019 brands?
In 2006, at the world\u2019s number one distributor
Wal-Mart, out of a turnover of US$285 billion,
40 per cent was made from distributor\u2019s
brands. This percentage is 60 per cent at Tesco,
the fourth-largest distributor in the world, 35
per cent at Metro, but 90 per cent at Aldi, the
king of the hard discounters. In the field of
sports products, it is 51 per cent at Decathlon.
Why do distributors come to set up their own
brands, to the point that \u2013 like Gap or Picard \u2013
they eventually sell nothing else?
For an answer to this question, we should
not look to the consumer, who is only too
happy to have finally found a cheaper
product. In reality, the true economic motor
of the unstoppable growth of distributors\u2019
brands lies with the industry: the distributors
and producers themselves.
In the mass consumption sector, the early
distributors\u2019 brands are almost always born of
a conflict between the distributor and the
producer. Dissatisfied with the poor
treatment it receives, the distributor has its
goods produced elsewhere, in order to plug a
gap, and sells them either under its own
name or under a private label. The atmos-
phere of conflict persists, particularly since \u2013
in Europe for example \u2013 brands now typically
depend on a very small number of distributor
clients (four) for 60 per cent of their sales.
Procter & Gamble makes 16 per cent of its
worldwide turnover (US$51 billion) from a
single client: Wal-Mart. In some sections the
concentration is even higher: Decathlon
accounts for more than 10 per cent of Nike\u2019s
sales in Europe. Furthermore, these distrib-
utors\u2019 brands parallel the worldwide devel-
opment of distributors, leading them to
match the expectations of quality products at
lower prices that are prevalent in emerging
countries (Brazil, Eastern Europe, Russia,
India and so on).
Consumers are selective. They decide in
which categories they are the most tempted to
buy distributors\u2019 brands: those in which they
have a low degree of involvement (Kapferer
and Laurent, 1995). Remember that brands
exist wherever customers perceive a high risk
in purchasing. Conversely, where they see no
risk, they are tempted by the distributor\u2019s
brand, particularly if they consider that
distributor to have a good reputation and an
image of quality. For example, the butter
category is now dominated by distributors\u2019
brands. Three-quarters of all the processed
meat sold in self-service stores in France is
low-cost or distributors\u2019 brand products, but
the same is not true of new food products,
such as low-fat butters and unsalted hams,
which suggests product development is a
source of concern, and consumers need the
reassurance of a well-known brand name. In
all cases where the consumer expects superior
performance (cosmetics, for example), the
producer\u2019s brand carries the day. The same is
true wherever the product has assumed the
status of a symbol or \u2018badge\u2019: again, the
distributor\u2019s brand fails to make an
impression, except where it has become itself
a declaration of self (the Gap is the anti-
fashion).
Now, emboldened by satisfactory past expe-
riences, consumers are taking the plunge:
there are distributors\u2019 brands for PCs, s120
bicycles, hi-fis and domestic appliances.
Consumers may want a Sony or Samsung tele-
vision for their living room, but in the kitchen
or in a child\u2019s bedroom they are less involved:
they may be tempted by a BlueSky
(Carrefour\u2019s low-cost hi-fi brand). The same is
true for home computing. Dell is a product
assembler, and sells under its distributor\u2019s
brand. However, its products are guaranteed
\u2018Intel inside\u2019.
In reality, the distributor\u2019s brand is based on
supply, not demand. Whenever distribution is
concentrated, and the size of the domestic
market makes it economically possible, there
is no other way of increasing return on
investment (ROI), as we shall analyse below.
On the one hand, in the previously inde-
pendent retail sector, as trade concentration
74 WHY IS BRANDING SO STRATEGIC?
progresses, the first step is to buy in bulk to
reduce purchasing costs. Next, a collective
commercial store name is applied (for
example Bureau +, Qualipage). But if there