Lately, private label products have made a significant impact on the U.S. market, affecting everyone, from producers to retailers to consumers. Private label items are products whose name or brand solely belongs to a specific retailer (e.g. Wal-Mart and Marks & Spencer). Let’s claim that you’re in a grocery store. At first you see all those gourmet sandwiches with brands that have long been familiar to you. Then you definitely head to Marks & Spencer and lo and behold, now they’re selling the exact same form 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 can be divided into sub groups: private label store brands are products where in actuality the retailer’s name is a strong factor in its packaging and marketing aspects; store sub-brands are products whose link with the retailer is minimal; umbrella branding is a strategy the place where a retailer uses only one private label for different product categories and finally there are individual brands in what type private label is accorded to 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 will be the upsurge in sales. And since it’s their own private label, the retailer then has got the freedom to create its marketing strategy, have significantly more control over its stock inventory and possibly utilize it also to gain an even more positive image to the public. And with a confident image, this will of course result in stronger customer loyalty. Naturally, having a private label for one’s products will mean investing a fortune therefore the retailer must make certain that it has got the capital required for such a venture. Secondly, many people still view private label products as something synonymous to lessen quality products so this is another issue that the retailer must attempt to combat because they launch their new line.
For producers and suppliers, the benefits of producing private label products for a retail company is less visible but nonetheless present, nonetheless. For starters, they remove the majority of the entry barriers a manufacturer usually faces as they fight entering a market because they’re supplying right to the retailer itself. Secondly, for cash-strapped suppliers, manufacturing private label products will let them enter the bigger and high end markets. The downside of all these of course is when the product doesn’t perform as expected. Low profit could then affect the relationship between the supplier and retailer.
For the consumer, the advantages and disadvantages are almost equal. Most private label items are cheaper than branded products. This might, of course, translate to lessen expenses for consumers, a thing that everyone would no doubt welcome. But if the quality of the product is sub-standard, as some private label items are, maybe you’re not getting the very best of the offer as you’ve originally thought.
By the end, everything comes right down to quality. Since price-wise, private label products have the top of hand, the only ace branded products have within their sleeves will be a more superior quality. But if a private label product is backed by way of a reliable retailing company, the product quality is normally equal to those who are branded. All you have to do would be to CHOOSE WISELY.