Comparing private label and manufacturer brand innovation projects in a Dutch Food processing company

Abstract

The time when private labels consisted only of low-priced, low-quality products has long gone. A new type of cooperative innovation project has emerged in which food processors and retailers work closely together to target consumers with new and innovative products. These so-called high-end private label innovation projects can be typified as Early Customer Integration (ECI) projects. ECI projects may show a higher level of market orientation than manufacturer brand innovation projects, which companies carry out entirely in-house. However, ECI might lead to more incremental innovation because of the path dependency of the customer input. The present paper aims to fill this gap by investigating these assumptions by analysing the innovation portfolio of a leading Dutch producer and exporter of processed food products that produces manufacturer brand, high-end private label as well as traditional low-end tendered private label products. Twenty innovation projects, 10 manufacturer brand, 7 high-end private label and 3 traditional low-end private label innovation projects, including 76 respondents, were investigated using the Wageningen Innovation Assessment Toolkit. All respondents were employees of the company and members of the cross-functional project team of the innovation project that they assessed. In total 17 R&D staff members, 10 marketing and sales managers and 8 managers from the business units filled out the questionnaires. Based on the finding that the high-end private label projects showed the highest scores on product superiority it may be concluded that ECI indeed helps to better understand and fulfil consumer demands. It must also be concluded that the lower scores of high-end private label projects on product novelty are an indication that, ECI may have led to more incremental innovation.