Lately, private label products have made a significant impact on the U.S. market, affecting almost everyone, from producers to retailers to consumers. Private label products are products whose name or brand solely belongs to a particular retailer (e.g. Wal-Mart and Marks & Spencer). Let’s claim that you’re in a grocery store. In the beginning you see dozens of gourmet sandwiches with brands that have been familiar to you. You then visit Marks & Spencer and lo and behold, now they’re selling exactly the same type of sandwiches too!
Private label products have grown significantly in Europe, especially in the Western half, and now it’s making its mark in the United States. Private labels could be divided into sub groups: private label store brands are products where the retailer’s name is a strong aspect in its packaging and marketing aspects; store sub-brands are products whose link with the retailer is minimal; umbrella branding is a method where a retailer uses just one private label for different product categories and finally there are individual brands in which one private label is accorded to at least one product type.
The advantages are of course numerous, to any or all key persons involved. For the retailer, one of the very most obvious pros is the increase in sales. And since it’s their very own private label, the retailer then has got the freedom to generate a unique marketing strategy, have significantly more control over its stock inventory and possibly put it to use also to achieve a far more positive image to the public. And with an optimistic image, this may of course cause stronger customer loyalty. Naturally, having a private label for one’s products would mean investing a fortune therefore the retailer must be sure that it has got the capital needed for this type of venture. Secondly, a lot of people still view private label products as something synonymous to lessen quality products so that is another issue that the retailer must try to combat because they launch their new line.
For producers and suppliers, the features of producing private label products for a retail company is less visible but nevertheless present, nonetheless. For starters, they eliminate all the entry barriers a maker usually faces as they try entering a market because they’re supplying directly to the retailer itself. Secondly, for cash-strapped suppliers, manufacturing private label products will let them enter greater and high end markets. The downside of most these of course is when the product does not perform as expected. Low profit could then affect the partnership involving the supplier and retailer.
For the consumer, the advantages and disadvantages are almost equal. Most private label products are cheaper than branded products. This will, of course, translate to lessen expenses for consumers, something which everyone would without doubt welcome. However if the quality of the product is sub-standard, as some private label products are, maybe you’re not getting the most effective of the offer as you’ve originally thought.
By the end, everything comes down seriously to quality. Since price-wise, private label products have the top of hand, the sole ace branded products have inside their sleeves would have been a more superior quality. But when a private label product is backed by a reliable retailing company, the product quality is generally corresponding to those who are branded. All one has to do is to CHOOSE WISELY.