Captive Brands: Stealing Share From National Brands

Captive brands are actually in-store brands that differentiate themselves based on brand versus price positioning. Captive brands do promote their affiliation with the retailer, are frequently positioned head-to-head with national brands, and receive marketing promotion and support beyond that typically given to store brands. The focus on brand differentiation enables captive brands to have stronger margins versus traditional store or private label brands that sacrifice margins to achieve low price positioning.

Brandweek points to Walgreens (WAG) bioInfusion hair care products, and the CVS (CVS) Cristophe line, both of which compete with Procter & Gamble (PG) Pantene, as successful captive brands. Because these two captive brands receive greater marketing support than typical store brands, they position themselves as premium brands similar to the quality and pricing of consumer packaged goods brands from companies like P&G. This helps retailers to achieve a “richer margin” on captive brands versus national brands.

Usually captive brands are created by the retailer. But in some cases they are abandoned national brands that find new life as captive brands.

One example of a national brand reborn as a captive brand is ‘White Cloud,’ a toilet tissue trademark abandoned by Procter & Gamble. Wal-Mart (WMT) licensed White Cloud and relaunched it as a Wal-Mart in-store brand of toilet tissues. It is a captive, versus a store brand, because it leverages its significant equity as a former national brand to differentiate itself from other tissue brands, versus competing solely on price.

Nuprin, an abandoned brand of ibuprofen painkillers is another example. The Nuprin brand name was sold to CVS and relaunched as a store brand.

Because of their attractive margins, captive brands will increasingly put pressure on national brands. For example, Walgreens says their bioInfusion line, created just three years ago, is now “one of the top brands in the entire hair care category."

Sources:
Retailers Rally Behind Their 'Captive Brands'
Can a Dead Brand Live Again?

See also:

brand defined
store brand, private label
national brand
positioning statement
point of difference
pain point
target audience
frame of reference
reason to believe
brand essence
portfolio architecture
commoditization
brand architecture

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