Transferability of Brand Equity to the Blue Label Products; a Case Study of Nakumatt Supermarket in Nairobi Kenya

Abstract

Private brands in the fast moving consumer category were introduced in our local market through the “kadogo” economy, where retailers repackaged products in smaller packages for resale to cater for the needs of the low income consumers who could not afford the branded products. This included but was not limited to repackaging products like sugar and cooking fat. Supermarkets’ own brands or private labels are on the rise, particularly with the launch of Nakumatt blue label private brand, where the development has opened a new warfront between local manufacturers of major brands and the retail chains. Consequently, the old traditional model where supermarket chains as we knew them only acted as a bridge between manufacturers and suppliers and customers is being turned on its heads, leaving some manufacturers discontented. This vicious battle between the manufacturers and supermarkets is heating up with the chains setting out tough promotional campaigns pitting their own private label brands against major brands as the battle for the price sensitive customers gets tougher with the tough economic times. The retail outlets who also own private brands seem to have a competitive edge over the manufacturers’ brands; in various fronts since they control what products they stock, where they are displayed on the shelves and which brands they feature in their local magazines/circulars. These retail stores also charge manufacturers brands slotting fees - payments demanded by retailers before they accept new products and find slots for them on the supermarket shelves. Additionally, the retail store give its private brands better display, visibility and shelf-space, compared to the manufacturer’s brands, yet these brands are competing for the same share of the wallet. A key benefit for supermarkets owning a brand is that it enables them to reap a higher profit margin than they would on other brands while selling the goods at a lower price to consumers. This is because the private labels are benchmarked, against leading brands in the respective categories, but also in most cases priced below their counterparts to entice shoppers. Nakumatt private brands, the blue label products are distinctively branded with an iconic blue band to reflect Nakumatt’s corporate colour and it cuts across all the categories of fast moving consumer goods. The primary aim of the study was to determine whether Nakumatt’s brand equity can be transferred to its blue label products. The researcher did a critical analysis on the variables within the customer perspective brand equity such as the perceived quality, brand awareness, customer loyalty, pricing and their impact on the consumers’ choice for private label brands compared to the manufacturers’ brands. The researcher also assessed the image of Nakumatt store and its effect on the blue label brand and the effects the blue label brands have on the stores image. From the findings of this study, the researcher was able to ascertain that brand equity can be transferred to private brands as long as there more value and fair pricing compared to national brands; as well as give suggestions for further research on the future of these private brands.