Analysis of Private Label Management in Non-Metropolitan Brazilian Retailers. Análise da Gestão de Marcas Próprias em Varejistas de Médio Porte

Transcription

1 PMKT Brazilian Journal of Marketing, Opinion, and Media Research ISSN: (Print) ISSN: (Online) Editor: Fauze Najib Mattar Valuation system: Triple Blind Review Languages: Portuguese and English Publication: ABEP Associação Brasileira de Empresas de Pesquisa Analysis of Private Label Management in Non-Metropolitan Brazilian Retailers Análise da Gestão de Marcas Próprias em Varejistas de Médio Porte Submission: 7 fev Approval: 25 jul Daniela Vasconcelos Arruda Master candidate in Business Administration from UFU. Specialized in Public Management by FINOM. Graduated in Business Administration from ULBRA. Administrative technician at Goiás Federal Institute. danivasconcelos@gmail.com. Address: Instituto Federal de Goiás - Campus Itumbiara - Av. Furnas, n 55, Village Imperial Itumbiara/GO - Brasil. Vérica Marconi Freitas de Paula Doctoral degree in Production Engineering from EESC/USP. Master in Production Engineering from UFSCar. Specialized in Business Administration from USP-FUNDACE/FEARP. Graduated in Food Engineering from UNESP. Professor of FAGEN/UFU. verica@terra.com.br. Verônica Angélica Freitas de Paula Doctoral degree in Production Engineering from UFSCar. Sandwich Doctorate (PDEE/CAPES) at Harper Adams University College. Master in Business Administration from FEA-USP. Graduated in Business Administration from FEA-USP. Graduated in Law from Universidade de Ribeirão Preto. Professor of FAGEN/UFU. veronica@fagen.ufu.br.

2 ABSTRACT Private labels have achieved more space on supermarkets shelves as this strategy may help increase retailers competitiveness, impacting on their profitability. This paper aims at analyzing private labels adoption and management in supermarket chains from non-metropolitan regions in Brazil, as well as the selection process of private labels suppliers. In order to achieve these objectives, two retailers were studied. Interviews were developed using a script previously applied in another research and they were recorded and then transcribed. The dimensions: general aspects of private labels, private labels management and selection and evaluation of private label suppliers were analyzed. It was possible to notice that supermarkets adopt private labels seeking mostly customer loyalty and to increase profitability. Retailers evaluate opportunities to introduce these products, positioned as intermediaries (after leading brands). During the selection of private label suppliers, aspects such as product quality and the manufacturer s financial situation are analyzed. It is possible to conclude that offering private labels is viable and may benefit non-metropolitan Brazilian retailers as it promotes brand recognition, customer loyalty and profitability. KEYWORDS: Private label, private label management, supermarket. RESUMO As marcas próprias têm conseguido cada vez mais espaço nas prateleiras e gôndolas dos supermercados. Essa estratégia pode viabilizar o aumento da competitividade do varejista e isso impactaria na melhoria de sua rentabilidade e lucratividade. Considerando o efeito que a adoção de marcas próprias pode ter, este artigo objetivou analisar o processo de adoção e gestão de marcas próprias de redes supermercadistas de médio porte em cidades do interior, investigando também, como os fornecedores dessas marcas são escolhidos. Para alcançar os objetivos propostos foram estudadas duas organizações, utilizando um roteiro anteriormente aplicado em outra pesquisa para consecução das entrevistas, que foram gravadas e transcritas. Foram analisados: aspectos gerais sobre marcas próprias, gerenciamento de marcas próprias e seleção e avaliação de fornecedores de marcas próprias. Foi possível perceber que os supermercados adotam as marcas próprias para fidelizar seus clientes e aumentar sua lucratividade. Os varejistas analisam onde há oportunidade e demanda para introduzir esses produtos, que são posicionados como intermediários (após a marca líder). Na escolha dos fornecedores, são observados aspectos como a qualidade do produto e a situação financeira do fabricante. Conclui-se que a utilização da estratégia de marcas próprias por redes supermercadistas de médio porte em cidades do interior, é viável e pode ser benéfica promovendo fixação da marca, fidelização de clientes e melhoria da lucratividade. PALAVRAS-CHAVE: Marcas próprias, gestão de marcas próprias, supermercados. 13, pp , October,

3 1. INTRODUCTION Supermarket chains have great representativeness for the Brazilian economy, keeping considerable growth rates as the 5.18% increase in sales from January to October of 2012, compared to the same period of the previous year (ABRAS, 2012). In this context, research on strategies and forms of management presented by the supermarket section can be considered relevant for both the practice and the Academy. Studying the practice of private labels management, considering that, gradually, their presence on the shelves and gondolas of Brazilian supermarkets has grown, is one way to contribute with knowledge to the Marketing area. Most research, however, refers to strategies for adopting private label by the largest supermarket chains, usually hypermarkets (SOUZA et al., 2009; ALMEIDA, 2010; PEZZINO; MATOS; FERREIRA, 2010). Researches with consumers, about their perception of private labels and decision-making elements also are being held (PEETERS et al., 2006; FIGUEIRA JR., 2008; LION; MELLO, 2009; SILVA, 2009; SILVA; MERLO; NAGANO, 2012). Thus, there is a gap regarding research on the insertion and management of private labels in chains that are not hypermarkets, as chains from nonmetropolitan regions. Therefore, it is possible to ask: how does the adoption and management of private labels occur and how are the suppliers of these brands chosen? In order to answer these questions, this paper presents two main objectives: Analyze the process of adopting and managing private labels by supermarkets from nonmetropolitan regions. Discuss the selection of suppliers criteria for supermarkets from non-metropolitan regions. In order to develop this analysis, two supermarket chains of Itumbiara/GO were chosen. They also operate in the State of Minas Gerais and they both offer private labels. 2. THEORETICAL FRAMEWORK 2.1 PRIVATE LABELS According to Santos, Campomar and Toledo (2010), brands provide meaning to the role of consumers because, in addition to ensuring the quality of the product, they also provide emotional satisfaction. Any product that does not have a brand or that its brand name is not recognized becomes less attractive to consumers. It is important that the strategic brand decisions are observed by companies, mainly because the brands are sources of differentiation against competitors. Branding strategies provide competitive advantages for organizations that use them properly and they are also important as they are sources of profitability for organizations (PIATO; PAULA; SILVA, 2011). 13, pp , October,

4 According to Cravens and Piercy (2008:267), the strategic management of brands is a fundamental issue in many organizations. One of the possible branding strategies is the private label, which represents an alternative of brand identity for the company. In this case, retailers hire manufacturers to supply the products that will be offered with the retailers brands. It is important to mention that private labels are products which are, traditionally, property of retailers or wholesalers and, according to Huang and Huddleston (2009), the term private labels is often used with the same meaning of other terms, such as: private brands, own label, retailers brands and store brands. In this paper, only the term private label will be used to facilitate understanding. Private labels are property of the retailer, controlled by the retailer and sold exclusively in its stores (HERSTEIN; JAFFE, 2007). They can be developed exclusively by a retailer or by a third part (HOCH; BANERJI, 1993). Responsibility for this strategy falls totally on the retailer. By adopting private label in a given product category, the retailer needs to play a series of marketing tasks that are normally performed by the manufacturer, from the construction of the private label, passing through the steps of development and production, to marketing and distribution. This means that the success or failure of the private label is a responsibility of the retailer. However, although it seems laborious, a private label program can be profitable (DHAR; HOCH, 1997; STEENKAMP; DEKIMPE, 1997). It is common that retailers develop the design and specifications for their private labels and then they hire manufacturers only to produce them. On the other hand, it is also possible that suppliers of national brands (or manufacturers brands) work with the retailer to develop a special version of its standard merchandise to be sold exclusively by the retailer. In cases like this, the design, specification and product manufacturing are also the suppliers responsibility (LEVY; WEITZ, 2011). Private labels started in Europe, where they have considerable market share. In Switzerland, for example, private labels participate in the families life with 46%, in the United Kingdom 42%, 38% in Spain, 30% in Portugal and 28% in France and in Germany. The insertion of private labels, however, is not restricted to Europe (ACNIELSEN, 2011). This strategy is disseminated in the international market, in countries such as Canada and New Zealand (18%), United States (17%) and Australia (14%) (ACNIELSEN, 2011). In Brazil, the participation of private labels is still limited. Research conducted by ACNielsen shows that, in 2009, 2010 and 2011, the participation of private labels on the market was 4.6%, 4.8% and 4.9%, respectively (ACNIELSEN, 2011). According to Piato, Paula and Silva (2011), private labels have emerged in Brazil in the decade of 1970 by the initiative of some multinational and national networks that have introduced generic products in their portfolios. 13, pp , October,

5 Only in the late 1980s other supermarket chains began to adopt this strategy, launching initially basic products without much concern for the quality and brand image. The most important variable was low price, but consumers had the perception that the quality of these products was lower than the leading manufacturer brands. As distributors realized several markets were based mainly on price, private label products were developed considering strictly the cost factor to increase profit margins through offering reduced prices to customers. As a result, low-quality products were developed, resulting in consumers distrust about the quality of private labels (PIATO, 2006). This perception that prices were low because the products had low quality turned out to be an obstacle to the development of this strategy, both in Brazil and in other countries (PIATO; PAULA; SILVA, 2011). In the current scenario, there was an improvement in these products quality, which became known as third generation of private labels (ALMEIDA, 2010). For Piato, Paula and Silva (2011), in this generation, private labels become followers of the leader, so that both the quality and the price level approach the ones for manufacturers brands. With a better development of private labels, with more options and communication, the difference in quality between private labels and manufacturers brands has become almost unnoticeable. Despite the fact that price and quality are still prevalent in the purchasing decision, other variables are considered: Variety. Communication with the consumer. Credibility of manufacturers. Product brand. Including the advantage to increase profit and customer loyalty, private labels can contribute to the strengthening of the brand and corporate image, however, for this to occur, the major retailers have to invest in intense and effective communication to strengthen their private labels and win consumers trust (ALMEIDA, 2010). Complementing with the vision of Huang and Huddleston (2009), the change in private labels positioning was allowed by the improvement in the retailers operation, from simple national brands distributors to an active role in the development and marketing of its own brands. Although private labels have been widely developed by retailers, it is important to consider three sets of actors that are affected by the entry of these brands on the market: retailers, manufacturers and consumers (HOCH; BANERJI, 1993; PAULWELS; SRINIVASAN, 2004). The supply-side is affected by retailer's decisions on allocations. The demand side is influenced by the needs, expectations and behavior of consumers; and the number, competitiveness and actions of manufacturers affect the competitive environment (HOCH; BANERJI, 1993). Deciding to invest in private labels as a marketing strategy, retailers must consider the interest of manufacturers in developing and of consumers in purchasing them (HERSTEIN; JAFFE; 2007). Therefore, it is important to discuss some features about private labels for retailers and manufacturers. 13, pp , October,

6 2.2 PRIVATE LABEL AND RETAILERS The decision to adopt private labels among its products is followed by some advantages and opportunities, however, the risks and challenges involved in that decision are many, requiring that the retailer be prepared to manage them (SANTOS; CAMPOMAR; TOLEDO, 2010). To offer a private label in its store, for example, a retailer must be willing to: invest in packaging and product registration; provide a space on the shelves and gondolas every day; and allocate resources for communication. The shelf space for private labels can be considered an opportunity cost, so the retailer must have a minimum performance of these brands. On the other hand, private labels allow retailers to track and manage their shelves and still create another level of relationship with consumers (HOCH; BANERJI, 1993; CONN, 2005). According to many authors, retailers may have advantages in offering private labels in their portfolio. Some of them are listed in Chart 1. CHART 1 Advantages of private labels for retailers. ADVANTAGES FOR RETAILER Consumers loyalty to stores that offer private labels increases. Differentiation from other retailers in an increasingly competitive environment. Strengthening the bargaining power of the retailer as with the increase in the success of private labels, manufacturers are more willing to negotiate prices with retailers. Sometimes, the simple threat of offering a new brand in the market is able to get the manufacturer to be more flexible in the negotiations. AUTHORS Steenkamp and Dekimpe (1997); Pereira (2001); Herstein and Jaffe (2007); Almeida (2010); Piato, Paula and Silva (2011) Steenkamp and Dekimpe (1997); Conn (2005); Herstein and Jaffe, (2007); Piato, Paula and Silva (2011) Steenkamp and Dekimpe (1997); Pereira (2001); Herstein and Jaffe, (2007); Piato, Paula and Silva (2011) Decrease the dependence of manufacturers brands. Conn (2005); Pereira (2001) Private labels are sources of competitive advantage. Pereira (2001); Almeida (2010); Piato, Paula and Silva (2011) Pereira (2001); Pauwels and Srinivasan (2004); Increase profit and results due to private labels Herstein and Jaffe (2007); Almeida (2010); Piato, higher unit margin. Paula and Silva (2011) Increase in the variety of products offered. Pereira (2001); Herstein and Jaffe (2007) Allow retailers to prevent against possible shortages of the product on the market. Pereira (2001) Although the list of advantages is extensive, there are some disadvantages that need to be considered when a retailer decides to include or not private labels in its portfolio. 13, pp , October,

7 As disadvantages it is possible to list: increased expenses with inventories, product development and marketing; and lack of support from manufacturers in promotions and in the communication of available items to the consumer (PIATO, 2006). However, private labels can be advantageous to retailers if they know how to manage them. Comparing with the 1970s, when private labels were introduced in Brazil, these brands outscored some barriers, keeping the growth and increasing the credibility of the product with the consumer. Conn (2005) asserts that private labels are no longer exclusively a me-too solution or a low price offer. Many of them are exclusive brands, premium quality, with the same level of quality of manufacturers brands. Shono et al. (2007), from a study of ABRAS, pointed the following positioning strategies that retailers adopt for their private labels: Premium or innovative products. Similar to the leaders. Intermediaries. First price. Premium or innovative products are differentiated and have higher added value. These products have higher price compared to their competitors. When well accepted by the market, they can increase retailers profitability and promote customer loyalty, as they are not found in other stores. Similar products to the leaders are those that can be compared to their main competitors in terms of quality. Intermediaries are the slightly lower quality products compared with the leader products, with prices between 20% and 30% lower. First price is an alternative product that does not compete with the leading brands and are targeted to consumers who seek a minor expense. Private labels have entered the market as a low-value product, but, increasingly, retailers have engaged in improving the quality of their products, with the goal of leveraging the image of their chain and encouraging consumer loyalty to the brand. The success of private labels strategy may be determined by the quality offered, as perceived quality is quite related to the retailers power of conquering and, consequently, increasing market share (STEENKAMP; DEKIMPE, 1997). 2.3 PRIVATE LABEL AND MANUFACTURERS Manufactures of national brands also have their advantages to provide private labels to retailers. In Brazil, according to Piato, Paula and Silva (2011), more often private labels are produced by manufacturers that do not have famous brands and found on private labels a chance to sell their products. 13, pp , October,

8 However, in developed countries, private labels, according to Herstein and Jaffe (2007), are produced by manufacturers of major international brands or domestic leading brands. This may be explained due to the fact that international markets, mostly European, have greater acceptance of private labels, which does not mean that investing in private labels does not have advantages in emerging markets. Some advantages for suppliers, according to some authors, are presented in Chart 2. CHART 2 Advantages of private labels for manufacturers. ADVANTAGES FOR THE MANUFACTURER Private labels can increase the sales volume and, consequently, market share. AUTHORS Increased revenue. Pereira (2001) Ensure an additional space on the shelves of supermarkets. Reduce excess on idle production capacity, without the costs of advertising and promotion. Reduction of overhead costs. Gains on scale, growth, increased cash flow and profitability. The possibility of improving the quality of its processes and products due to the clients' requirements. Steenkamp and Dekimpe, (1997); Pereira (2001) Pereira (2001) Steenkamp and Dekimpe (1997); Pereira (2001); Almeida (2010); Piato, Paula and Silva (2011) Piato, Paula and Silva (2011) Piato, Paula and Silva (2011) Another relevant observation regarding the Brazilian market is that for small and medium-sized manufacturing companies, with commercial limitations to develop a manufacturer brand, private labels represent a possibility to thrive in a market where they had no strong performance previously (PIATO; PAULA; SILVA, 2011). 3. METHODOLOGICAL ASPECTS In order to achieve the proposed objectives, this research was outlined as applied, exploratory and qualitative, field research as investigation mean with data collection through semi-structured interviews. The nature of this research is applied because it has a practical purpose and was motivated by the need to solve practical problems (VERGARA, 2009). The method of qualitative approach was used based on the examination and reflection of perceptions in order to understand social and human activities (COLLIS; HUSSEY, 2005). As for its goal, the research was established as exploratory, since its purpose was to investigate the unknown reality, aiming at expanding the existing knowledge on the subject (HAIR JR. et al., 2005). Finally, field research was chosen for being: Held where a phenomenon occurs or occurred or that offers elements to explain it. It may include interviews, questionnaires, tests and participant observation or not (VERGARA, 2009: 43). 13, pp , October,

9 The interviews were recorded and transcribed. An adapted semi-structure script previously applied in Paula s research (2008) was used. The original script was structured in parts, and the following parts were used in this study: General aspects about private labels. Private labels management. Selection and evaluation of private label suppliers. The analysis of this research s results was based on the structure of the script. The dimensions analyzed were: target market; location; time of private labels offering; motivation for launching private labels; product lines offered by retailers with private labels; cases of failure of private labels; main advantages obtained with the adoption of private labels; and the main selection criteria of private label suppliers. In order to ensure the internal validity and the reliability of this study, the procedures proposed by Yin (2003a) and used by Paula (2008) were followed, highlighting: Data analysis with analogies to the researched theory. Research protocol previously tested. The supermarket chains studied (here called Chain A and Chain B) were selected for the following reasons: They meet the purposes of the research as they are located in non-metropolitan regions of Goiás and Minas Gerais and they are medium-sized chains. Act in the same macro-region, headquartered in the same city and with branches in the States of Goiás and Minas Gerais. For convenience, considering the researchers geographical access to them. After a personal visit to the supermarkets and a first contact to determine who would be interviewed in which chain, phone calls and visits were made to the stores and the date and time of the interviews were set. According to the data synthesized by Parente (2000:30), the supermarkets studied can be considered as "supermarket" as they have sales area between 300 m 2 and 700 m 2 ; their portfolios include 4,000 items on average; and they have from two to six checkouts. This classification fulfills the requirements of this research, which aimed at analyzing medium-sized supermarkets. 4. RESULTS ANALYSIS 4.1 ANALYSIS OF THE RESULTS OF CHAIN A Chain A has nine stores located in non-metropolitan cities of the State of Goiás, generally located in the city center. Most of the stores are mid-sized and directed to classes A, B and C. This Chain has been offering private labels for about one year and a half. The main factors for the development of these brands were: to create partnerships with manufacturers and to take advantage of market opportunities in specific segments. By deciding to name the private label with the Chain s name, its intention was to strengthen its brand by connecting the products to the supermarket brand. The product lines offered as private 13, pp , October,

10 labels are: coffee, ice cream, sauces for salad and garlic in bulk. The retailer is in the process of introducing private label in the category of soda. As a criteria to chose the categories to offer private labels, Chain A evaluates: Market opportunity. Segment or product line opportunity. Number of national brands available in a particular category. Chain A offers intermediate level private labels. The company has no premium line, the main focus of the Chain is to offer quality products, but with lower prices. The same categories of private label products are available in all stores of Chain A, without distinction. So far all the products that have been released with the retailers brand are on the market, there are no cases of failure. According to Chain A, the main advantages with the adoption of private labels were: Profitability that private labels provide to the supermarket, as a result of the partnership with suppliers, enabling the company to manage its profit margin better. Possibility to create a product that does not exist in a specific market niche, with greater or lesser added value. Adding the brand name to a product, reaching a niche that may not be reached by national brands. Responsibility for private label management is outsourced, carried out by a consultancy in marketing with the support of the commercial manager of the store. Regarding the selection and evaluation of suppliers, the main criterion is the quality of the product. Chain A also favors suppliers that have been working for a long time in partnership with the supermarket, located in various regions of the country. It is also important to note that Chain A has an exclusivity warranty defined in the contracts with private label suppliers. When the result of the products insertion is positive, the supermarket maintains the same suppliers for a particular product category, in order to ensure a standard for the products. On the other hand, for different categories suppliers may be different, because each one of them has its specialty. The quality of the products is frequently checked. In addition to commercial analysis, such as sales volume, product turnover and financial return, Chain A also conducts a satisfaction research with customers of its products, to identify strengths and weaknesses and to detect opportunities and threats of the market. 4.2 ANALYSIS OF THE RESULTS OF CHAIN B Chain B has nine stores in the States of Goiás and Minas Gerais. As its location disperses, the supermarket attends all classes: some stores attend classes A and B, while others have easy access to most popular neighborhoods. 13, pp , October,

11 The Chain has been working with private labels for five years and the reasons for their development were: Attempt to increase the margin and increase profitability. Customer loyalty to the brands offered. One of the advantages observed by the company with the commercialization of these products was the customer loyalty, due to brand exclusivity. As a result, the supermarket also improved its profitability. Currently, the supermarket offers private label in several product lines: ice cream, coffee, rice, beans, sauces for salad, spices, garlic in bulk and cookies. When an opportunity to offer a new private label product is identified, the retailer chooses to invest. Besides that, before launching a specific private label product, the supermarket removes the last selling brands from its portfólio in this category to concentrate and focus on the private label. All stores of this Chain offer all private labels. All products that were released with the supermarket brand were well accepted by customers and they have been on the shelves since their launch, representing more than 50% of the earnings of each category in which the private label is offered. Private labels of Chain B are positioned as followers of the leading brands, their prices are smaller than the prices of the sales leaders. It also makes the products viable, considering the level of quality that the company seeks to maintain for its private labels. It is worth commenting that both Chain A and Chain B position their private labels under the leading brands, which could be categorized as an intermediary in the positioning of the private labels. Private labels in Chain B are managed by the purchasing team. The product formulation is the same of the products already sold by the manufacturer, however the supermarket, through a technical manager, sends these products to a laboratory to perform quality tests. The packaging is defined by the retailer s Marketing department, which is responsible to approve the product image that will be manufactured and delivered by the supplier ready to be displayed on the shelves. Private label from Chain B is exclusive of the supermarket, and suppliers are prohibited of selling it. The item coffee is an exception; the supplier may sell this product with the retailers brand in towns where Chain B is not present. In this case, the supplier pays for the right to use the retailer s brand. This negotiation can be considered beneficial for the supermarket as it may increase the margin on the value received for the brand use and it is also possible to make its brand recognized in places where the supermarket does not have stores. The first criterion of the selection of suppliers is financial, as the supermarket wants to ensure the continuity of private labels supply. 13, pp , October,

12 After the approval of the financial situation, a food technician from the supermarket visits the supplier to analyze cleaning, hygiene and organization. Finally, the quality of the product is analyzed by external laboratory and it is verified if the product meets the requirements of the supervisory institutions. It is important to comment that due to commercial negotiation, Chain B chooses to maintain two suppliers for the same product in some cases. However, the supermarket maintains the same pattern (same characteristics) for these products, regardless the supplier. Chart 3 summarizes the vision of each Chain studied about the main points discussed on private labels. CHART 3 Comparison of private label management in Chain A and Chain B. FEATURES CHAIN A CHAIN B Target market Classes A, B and C Indistinct Location City center Disperses Time of private labels offering 18 months Motivation for launching private labels Product lines offered by retailers with private labels Cases of failure of private labels Main advantages obtained with the adoption of private labels Main criterion of suppliers selection Establish partnership with suppliers Take advantage of market opportunities Coffee, ice cream, sauces for salad and garlic in bulk None Profitability (increased profit margin) Exploitation of untapped niche market Adding the retailer name to the product Product quality 60 months Increase the margin Improve profitability Retain customers Ice cream, coffee, rice, beans, sauces for salad, spices, garlic in bulk and cookies None Improvement of profitability Customer loyalty Financial 5. FINAL CONSIDERATIONS The analysis of private labels management for mid-size retailers located in non-metropolitan regions of the States of Goiás and Minas Gerais (one of the proposed objectives for this study) has identified that some of the reasons of these supermarket chains to invest in private labels are similar to the motivating factors for hypermarkets. The reasons of the supermarkets studied to offer private labels are: Customer loyalty. Increased profitability and profit margin. Consolidation of the partnership with suppliers. Leveraging market opportunities (using as a criterion the lack of products in that category). 13, pp , October,

13 In the cases studied, the main benefits observed in the introduction of private labels were: Adding the retailer s brand to a product. Reaching an untapped niche market. Improvement of profitability for the supermarket. Customer loyalty. The formulation of the private label product can be the same as the supplier. The main difference lies in marketing aspects, such as the brand, the labels and packages, which are defined by the retailer marketing department. The second aspect defined in the main objectives of this study was the criteria and requirements for the selection of private labels suppliers. Regarding the evaluation for supplier's definition, the first aspect analyzed is the quality of the product offered. Another important issue is the supplier s financial capacity to ensure that it will be able to provide the product without interruption. It is interesting to note that every supermarket follows its own strategies when hiring private label suppliers, but when comparing the results of this study to the study developed by Yokoyama, Silva and Piato (2012), with one of the three largest supermarket chains in the country, there are similarities regarding this process. Another interesting aspect is related to the positioning of the private labels. Both Chains positioned their products as intermediaries behind the market leading brand. The hypermarkets, on the other hand, intend to invest in various positions for its private labels. Yokoyama, Silva and Piato (2012) present a chain that offers in its private label mix: products similar to the leading brand (representing 60% of all its private label products), mid-tier price and also premium products. Similarly, Grupo Pão de Açúcar, one of the most investing chains in private labels in Brazil, offers high-quality, premium and higher price products, but it also invests in products to compete with the stronger brands, offering products similar to the leading brands, guaranteeing lower prices (SERRALVO; ESTENDER, 2008). It is possible to infer that smaller retailers do not have physical structure and financial resources to work like the major chains. It is important to note that Chain A claims that the private label management is outsourced, performed by a marketing consultancy, which is supported by the sales manager of the store, while in Chain B it is the responsibility of the purchasing team. The study of Yokoyama, Silva and Piato (2012), held in a large chain, demonstrates that there is an exclusive department to develop private labels independently of the supermarket commercial department. This difference from the Chains studied in this paper may be due to the impossibility to allocate people to act exclusively with private labels, considering the size of the retailers, the amount of private label products to be developed and managed, as well as the amount of investments that would be required to establish this framework. 13, pp , October,

14 Finally, another aspect not found in the literature related to private labels in large chains is the fact that Chain B allows the marketing of one of its products (coffee) through another channel agent in this case, in places where the supermarket does not have stores. This alternative is advantageous for the retailer as its brand can become known beyond its borders. In addition, it contributes to increasing its margin, since the supplier pays a given value to use its brand. Considering the discussion of the main aspects involved in managing brands, this study contributed to the debate of the process of adopting and managing private labels, but its major contribution was the analysis of this marketing strategy applied to smaller retailers, located in non-metropolitan regions, whereas most of the research about private labels management has been developed with hypermarkets. In this way, it is noticeable that the adoption of private labels by smaller supermarkets is viable and can be beneficial for these organizations on issues such as the establishment of brand, customer loyalty and increased margin. 5.1 LIMITATIONS OF THE STUDY As limitation of this paper, it is important to comment that as the field research was held with two chains, the generalization to other organizations is not possible. Similarly, the results do not represent the reality of mid-sized supermarket sector. Nevertheless, the results discussed may represent a source of information for managers of organizations that intend to adopt private labels. Or even for those who already use them, as these results may be seen as a reference of practices that succeeded. And for scholars and researchers of the topic, this paper may contribute with a small breakthrough in mapping the reality of managing private labels in Brazil, making it possible to present some ideas for further research, as described in the next section. 5.2 RECOMMENDATIONS FOR FUTURE STUDIES This study has not examined the consumer s vision about private labels that are offered by midsized retailers. It is interesting to investigate this aspect. Similarly, it is interesting to perform an analysis with suppliers (manufacturers) of private labels for the studied retailers, aiming at identifying the motivation to supply private labels, as well as the perceived advantages and disadvantages. 6. REFERENCES ASSOCIAÇÃO BRASILEIRA DE SUPERMERCADOS ABRAS. Renda cresce em 2012, mas PIB decepciona. 28 dez Disponível em: < capa/?materia =6668>. Acessado em: 18 jan ACNIELSEN. 17º Estudo Anual de Marcas Próprias Disponível em: < Acessado em: 27 jun , pp , October,

15 ALMEIDA, C. A. de S. Construção e gestão de marcas próprias no grande varejo supermercadista brasileiro: um estudo de caso f. Dissertação (Mestrado em Administração). Pontifícia Universidade Católica de São Paulo, São Paulo, COLLIS, J.; HUSSEY, R. Pesquisa em Administração: um guia prático para alunos de graduação e pós-graduação. 2. ed. Porto Alegre: Bookman, CONN, C. Innovation in private-label branding. Design Management Review. v. 16, n. 2, p , CRAVENS, D. W.; PIERCY, N. F. Marketing estratégico. 8. ed. São Paulo: McGraw Hill, DHAR, S. K.; HOCH, S. J. Why store brands penetration varies by retailer. Marketing Science. v. 16, n. 3, p FIGUEIRA JR., M. F. Marcas próprias de supermercado: um estudo com consumidoras na cidade de São Paulo. 2008, 130 p. Dissertação (Mestrado em Administração) Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo, HAIR JR., Joseph F. et al. Fundamentos de métodos de pesquisa em administração. Porto Alegre: Bookman, HERSTEIN, R.; JAFFE, E. D. Launching store brands in emerging markets: resistance crumbles. Journal of Business Strategy, v. 28, n. 5, p , HOCH, S. J.; BANERJI, S. When do private labels succeed? Sloan Management Review. v. 34, n. 4, p , HUANG, Y.; HUDDLESTON, P. Retailer premium own-brands: creating customer loyalty through own-brand products advantage. International Journal of Retail & Distribution Management. v. 37, n. 11, p , LEÃO, A. L. M. S.; MELLO, S. C. B. Atividades marcárias na vida cotidiana dos consumidores: descoberta de uma nova forma de se pensar as marcas? RAC, Curitiba, v. 13, n. 1, art. 6, p , jan/mar, LEVY, M.; WEITZ, B. A. Retailing Management. 8. ed. Boston: McGraw-Hill, PARENTE, J. Varejo no Brasil: gestão e estratégia. São Paulo: Atlas, PAULA, V. A. F. Estratégias de marcas no varejo de alimentos: concepção e gestão de marcas próprias na Inglaterra e no Brasil f. Tese (Doutorado em Engenharia da Produção) - Departamento de Engenharia da Produção da Universidade Federal de São Carlos, São Carlos, PAUWELS, K. SRINIVASAN, S. Who benefits from store brand entry? Marketing Science. v. 23, n. 3, p , , pp , October,

16 PEETERS, T. H.; BISARRO, M. L. B.; AMARAL, F. S. do.; BACHA, M. L. Estratégias de marca própria refletida na imagem percebida pelos compradores de super/hipermercados. Jovens Pesquisadores. v. 3, n. 1 (4), jan/jun, PEREIRA, I. Marcas de supermercados. Revista de Administração de Empresas. v. 41, n. 1, p , jan./mar., PEZZINO, R. H.; MATOS, M.; FERREIRA, A. Marcas próprias e barras de cereais: análise das estratégias das redes Pão de Açúcar e Carrefour. In: SIMPOI São Paulo, Anais... do SIMPOI. São Paulo, PIATO, E. L.; PAULA, V. A. F. de; SILVA, A. L. Gestão de marcas próprias: novas dimensões para indústria, atacado e varejo. São Paulo: Atlas, PIATO, E. L. Estratégia de marcas próprias: estudo multicaso no atacado brasileiro. São Carlos, f. Dissertação - (Mestrado em Engenharia de Produção) - Universidade Federal de São Carlos UFSCar, SANTOS, S. C. dos; CAMPOMAR, M. C.; TOLEDO, G. L. Marcas próprias no varejo: evolução, estratégias e desafios. Revista Científica da FAI, Santa Rita do Sapucaí, MG, v. 10, n. 1, p , SERRALVO, F. A.; ESTENDER, A. C. Posicionamento de marcas para o topo da pirâmide social. Revista Administração em Diálogo, n. 11, v. 2, 2008, p SHONO, C. F.; BIMBATTI, M. L.; RICIERI, E. C.; AMADO, L. C.; SEOANE, M. E. Marcas próprias gerando vantagens competitivas no mercado varejista In: Seminários em Administração, 10., 2007, São Paulo. Anais... São Paulo: FEA-USP, SILVA, L. A. da; MERLO, E. M.; NAGANO, M. S. Uma análise dos principais elementos influenciadores da tomada de decisão de compra de produtos de marca própria de supermercados. REAd, Porto Alegre. 7. ed., n. 1, p , janeiro/abril, SILVA, L. A. da. Atitude do consumidor em relação às marcas próprias de supermercados: um estudo exploratório. 2009, 220p. Dissertação (Mestrado em Administração) Faculdade de Economia, Administração e Contabilidade. Universidade de São Paulo, SOUZA, T.; QUEIROZ, T. S.; CAMPOS, D. F.; VIEIRA, R. S. G. Estratégias de marketing: marcas próprias como um diferencial competitivo no setor de supermercado. Revista Brasileira de Gestão de Negócios. v. 11, n. 30, p , jan/mar, STEENKAMP, J. B. E. M.; DEKIMPE, M. G. The increasing power of store brands: building loyalty and market share. Long Range Planing. v.30, n. 6, p , VERGARA, S. C. Projetos e relatórios de pesquisa em administração. 10ed. São Paulo: Atlas, , pp , October,

17 YIN, Robert K. Case study research: design and methods. 3ed. Thousand Oaks: SAGE Publications, 2003a. v. 5,181 p. YIN, Robert K. Case study research: design and methods. Newbury Park: Sage Publications Inc., YOKOYAMA, M. H.; SILVA, A. L.; PIATO, E. L. O desenvolvimento de marcas próprias: estudo comparativo entre o varejo e fornecedores da indústria alimentícia. Gestão e Produção, São Carlos, v. 19, n. 3, p , pp , October,