Category-specific Private Label (PL) branding is common. For example, Spar Netherlands offered 50+ economy PL ranges like “Casa Italiana” for pasta, “Landhof” for coffee or “Summit” for colas. In 2014 the retailer consolidated all these PLs under one umbrella brand named “OK€”. How did this strategic branding decision impact brand strength and marketing mix effectiveness of its PL range?
- The rebranding strategy had a positive impact on sales of the PL tier.
- OK€ experienced an average category sales increase of 36% after one year. The umbrella brand boosts awareness across categories and reduces uncertainty for shoppers.
- Price-sensitivity declined. The unified name increases brand awareness and reduces shoppers’ focus on low prices alone.
- Both the sensitivity to assortment size changes and promotional activities dropped. Consumers likely react less to range and rebates because the vast assortment under one brand name makes it difficult to cut through with isolated activities.
Running an umbrella brand can be an attractive strategy for retailers and offers the chance to transform single PLs into a “real” consumer brand, which is less dependent on rock-bottom prices. Besides the sales impact, an umbrella brand may also increase retailer profitability through reduced costs and resource optimization.
Source: Keller, K. O., Geyskens, I., & Dekimpe, M. (2020). Opening the umbrella: The effect of rebranding multiple category specific private-label brands to one umbrella brand. Journal of Marketing Research.