42 CHAPTER 2 BRANDINGextensively to store brands during recession times than they switch back to national brands
in a subsequent recovery.^7 Indeed, recent Nielsen results indicate that 60% of European
shoppers say to buy more private label products during the current economic downturn
and 92% agree to continue buying them as the economy recovers.^8
As a consequence, brand manufacturers have to take the competition of private labels
seriously at all times. Six strategic options can be chosen: (1) increase distance from private
labels through innovation; (2) increase distance from private labels by investing in brand
equity (off er ‘more value for money’ by stressing brand image, changing packaging, etc.);
(3) reduce the price gap; (4) introduce a value-fl anker as a me-too strategy; (5) wait
and do nothing; and (6) produce (premium) private labels. A study in the Netherlands
shows that the best strategy for national brands might be to react by investing in innova-
tions and brand image. Th is is preferred to ‘wait and do nothing’, although the latter may
sometimes be eff ective (e.g. wait until the company is ready to come up with the next
innovation). Producing private labels may also be a viable option, especially in product
categories with high private label market shares or many possibilities for technological
diff erentiation. Producing private labels for retailers has the advantage that it strengthens
the ties with the retailer. Furthermore, it can also be very profi table for the company if it
has excess capacity. Finally, companies seem to react to the competition with private labels
in a subtler way than to other brands. Decreasing the distance from private labels by price
reductions and value-fl ankers is less used. Obviously the latter would sour the relationship
with the retailer. Furthermore, it oft en also seems to have a detrimental impact on the
company’s and market profi tability.^9- Generic brands indicate the product category. In fact, the concept is a contradiction in
terms. Generics are in fact brandless products. Th ey are usually sold at the lowest prices.
In pharmaceutical products, generics are quite successful. Th e end of the legal protection
of a patent allows the introduction of generics at lower prices. Depending upon the
country, generics account for a substantial share of pharmaceutical product sales.
Successful brands
Giving a product a brand name does not always guarantee success. Successful brands have to
meet a number of conditions:^10
z Successful brands are diff erentiated. Consumers clearly perceive them as having unique
benefi ts and being diff erent from the competition.
z Top brands are positioned on quality and added value. Superior product quality is a pre-
requisite for successful branding. Oft en it is not only the product that is superior but also
the additional service which is less easily copied by competitors.
z Leading brands continually innovate to answer changing consumer tastes and to keep
ahead of the competition.
z A leading position can only be sustained by having full support and complete commit-
ment of both management and employees.^11 Remember that every brand contact matters:
how a call to a helpdesk is answered, what happens when advice is sought or when a com-
plaint is raised, etc. A company’s employees and the engagement they show to the brand
has never before been more important. Especially in service branding, internal marketing
(i.e. training and communicating with internal staff to convince them of the basic strategic
priorities and keep them tuned to the brand promise) is vital. Th e success of a bank,
an airline or a restaurant largely depends upon the motivation and quality of the service
provider (bank clerk, steward or waiter) to satisfy the customer.
z Brands cannot become success stories without long-term, consistent communications
sup port, making customers aware of their uniqueness and keeping the brand’s valueM02_PELS3221_05_SE_C02.indd 42M02_PELS3221_05_SE_C02.indd 42 6/5/13 2:59 PM6/5/13 2:59 PM