What own brands want

Published: 13-Dec-2012

In the first of a series on product development, Aran Puri explores the opportunities available to private label manufacturers

In the first of a series on product development, Aran Puri explores the opportunities available to private label manufacturers

The last two decades have seen the emergence and evolution of an impressive range of ‘own brand’ cosmetics, which are now making a very significant impact on the market. According to Euromonitor International, the value of private label in 2010 was estimated at around 2.5% of the overall global beauty and personal care market.

Initially the main aspiration of own label was to offer a product that was perceived by customers to be same as the leading national or international brand but more cost effective. Both packaging and product were deliberately designed to look similar to the leading brand, taking care not to incur the wrath of the brand’s legal enforcers. The own brand product was then merchandised alongside the original brand.

Private label has evolved a long way since then. Talking to some of the leading own label brands I get the firm impression that they now want to get a product from their suppliers that is not just as good as the leading brands but is superior to them, a high technology product that is perfectly designed to suit the profile of their shoppers.

It is not surprising that innovation was the first and the paramount requirement of everyone I spoke to during the course of my research. Everyone wanted groundbreaking innovation from their suppliers to stimulate their customers’ appetites and enhance the profile and reputation of their brand. In this very tough and challenging marketplace it is what they need to become a dominant brand. They point to many examples where this approach has worked in the past including the success of Boots No7 Protect & Perfect anti-wrinkle creams and serums.

With regard to pricing and value for money, it still remains an important criteria although it is now becoming less of a deal breaker. Beverley Bayne, senior creative perfumer for CPL Aromas, comments: “Own label brands are pushing the boundaries of cost/performance to improve the efficacy of products and fragrances while still offering the consumer value for money.”

Time to market is often an area of great contention. The nature of own brand marketing is that a product needs to be launched very rapidly, as soon as the original branded product’s sales curve starts to show a significant upward trend. The aim is to allow the own brand product to have a maximum lifespan before the branded competitor reaches critical mass and its sales start to decline.

Coping with fluctuation in demand is another problem area. Since own brands are following the sales of branded cosmetics, their sales can take off or slow down depending on the marketing activity and success of the brand. They have less control and cannot give much advance notice to their supplier to react. However they expect their suppliers to have the resources and flexibility to react on short notice. One way is to keep a larger inventory and forecast but this entails risks if there is downturn in sales.

Similarly if success leads to opportunities for brand extension, own brands want to move quickly with follow-up products to extend the range and they expect their suppliers to be proactive, and ready to move quickly at short notice. Other important factors such as the ability to provide cost effective packaging to fit the brand’s image, as well as meeting quality, efficacy, safety and regulatory requirements are also part of own brand customers’ standard expectations.

Earlier this year Marks & Spencer, an important own brand player in the UK, unveiled its new cosmetics business strategy whereby it will now sell branded cosmetics alongside its own brands. According to technical manager Shona Bear, key to the strategy will be understanding trends and brands as well as maintaining a close working relationship with product and raw material suppliers. “M&S wants to increase its business substantially and launch cosmetics that are unique and different,” she said.

<i>Dr Aran Puri, Cosmeceutical Solutions</i>

Dr Aran Puri, Cosmeceutical Solutions

Independent unbiased endorsement of a product in the press, internet, TV or by word of mouth has an enormous impact on a consumer’s decision to buy a product such as when UK tabloid newspaper, The Sun reported in September this year: ‘Lidl’s £3.99 aftershave thrashes posh rival in a blind test’. The famous brands selected for comparison were priced between £39 and £44.

In Germany there is an independent, much respected product evaluation and comparison magazine called Öko-Test. News of its evaluation of a category of products strikes fear amongst suppliers since Öko-Test’s endorsement or criticism of a product has such an impact on consumer selection.

US based ChemAid Laboratories is one of the leading manufacturers of own brand products for own brand labels. Terry Petraia, vp technical services, comments: “I believe to be able to market truly innovative products not only does our customer pay for the raw materials in the bottle but they also pay for the expertise and services needed to develop and launch a truly innovative marketing idea to their customers. A contract manufacturer becomes an extension of the marketer and assists throughout the entire launch process.”

It is important for own brand customers and their suppliers to understand each other’s challenges and find mutually agreed solutions which work for both sides of this important sector of the cosmetic industry, ensuring it continues to flourish. After all, the multinational giants with their huge resources will never allow themselves to be easily beaten.

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