Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Private Label

Your Lower price alternative to Branded ones.

  • Login to see the comments

  • Be the first to like this

Private Label

  1. 1. 1 Doingshopping,whilewe roamarounda brandedretail store,we alwayscome acrosssome new low- pricedbrandof productswhichwe have neverheardoff.Andtheyare the productswhichyou will not findinotherretail shops.Whyisthat? Its veryinterestingtoknow the factthat these productsare the brand of that particularretail,whichare calledas‘Private Labels’. Manycorporationswanttoput their ownlogoson productsthat theygive awayto reinforce theirbrands,while thereare some corporations whodon’tdisclose abouttheirprivate brandinthe store. Store brandproductsnow accountfor 25% of salesat US supermarketsand40% of salesatWal-Mart. Concept Brand ownednotbya manufacturerorproducerbut by a retailerorsupplierwhogetsits goods made by a contract manufacturerunderitsown label.Theyare alsocalledasprivatebrand.Theyare typically those manufacturedorprovidedbyone companyforofferunderanothercompany'sbrand. Thatbrand can be the retailer'sownname ora name createdexclusivelybythatretailer.Insome cases,aretailer may belongtoa wholesalegroupthatownsthe brandsthat are available toonlythe membersof the group.Theyare oftendesignedtocompete againstbrandedproducts,offeringcustomersacheaper alternative tonational brands. Theyare all merchandisesoldunderaretailer'sbrand. Private label acknowledge the birth,historyandexistence of genericandstore brands.Itis oftenthe lowerpriced alternative tothe “real”thing, Reason The reason behindwhybrandretailersoptforprivate label isthatthey have a greaterControl over productor service pricing andalsothere isneedtobe marketingdependence. Promotioncostforthe store brandsis zerooutside the stores. Lower Prices/HigherMargins: Retailerscontinuedtopushmore andmore private label productsintodifferentcategoriesof the marketplace because theyrepresentedhighmarginsandthe promise of profitabilitywithlittletono marketingeffort. Thiscanbe far more profitable thansellingnationallyadvertisedbrands.A Food MarketingInstitute studyinthe UnitedStatesfound thatRetailgrossmarginsare higheron store- branded products(35%) compared to nationally advertised brands(25.9%). Private-Labelproductsare pre-manufactured,pre-testedproducts.Privatelabel servicescansave your time,moneyandeffortascomparedto productdevelopmentfromscratch.There are alsolow start-up costs andyour private label manufacturer’sexperience limitsyourrisk.Youalsoenjoyhigherprofit marginsand bettercontrol overinventory. Moreover, itprovide muchlowercostof production than brandedproducts,especiallysinceall brandedcompaniesalreadycoverR&Dand marketingexpenses for theirexistingproducts.
  2. 2. 2 Brand Loyalty: Private-brandproductsallowretailerstodifferentiatetheirproductsfromcompetitors'products,and provide consumerswithanalternative tootherbrandsat low price. These advantagesprovide anedge overthe otherbrand, whichhelpcreate apersonalizedanduniquebrandforretailers.Retailerswith prettygoodprivate-label brands cancreate bettersalesopportunitiesforthemselves.Theycanbuild value andrecognitionfromthe customers.If consumers seriouslyconsiderprivate labelsasacceptable alternativestonational brandsthenretailerscancapitalizeonthisshiftinpublicperceptionbyoffering qualityprivate label products.This canfostera feelingof brandloyalty&buyerswill also be encouraged to come back to the store againand again. Difference between Private Label Manufacturing & Contract manufacturing In a contract manufacturing business model, a contract manufacturer is approached with company’s own product or formula and ask them to make it for them. For the agreed-upon price, the contract manufacturer acts as your factory, producing and shipping units of the product on your behalf. A private label manufacturing company, on the other hand, has a stock of formulas ready to be bottled and sold under your brand name. A company just needs to tell them about the product and quantity to be manufactured with the brand name. ConAgra is one of the biggest private label manufacturer company. Private Label Manufacturer Association The private label businessisunique andtofulfill theirneedsandobjectives, thereisatrade association that servesthe industryexclusively.Foundedin1979, the ‘Private Label ManufacturersAssociation’is the international trade organisationdedicatedtothe promotionof private label brands. Theyhave their officesinAmsterdamandNewYork. PLMA representsmore than3,500 manufacturersandsuppliers worldwide, rangingfromcompaniesthatspecialise inprivate label tothose thatproduce private label productsin additiontotheirownmanufacturerbrands.PLMA offerstrade shows,programmes,and servicesthatare specificallydesignedforthe industry
  3. 3. 3 Withthe helpof theirownbrand,theytry to change the customers’preferences. Today'sretail marketersare managingtheirproprietarybrandswith the same combinationof care and innovationasmanufacturersof national brands. WHO MANUFACTURE PRIVATE LABEL? Manufacturersof private label productsfall intothree generalclassifications:  Large manufacturerswhoproduce boththeirownbrandsandprivate label products.  Small andmediumsize manufacturersthatspecialise inparticularproductlinesandconcentrate on producingprivate label almostexclusively.  Major retailersandwholesalersthatoperate theirownmanufacturingplantsandprovide private label productsfortheirownstores. From anyof thisprivate label manufacturer,goodsare orderto be producedandthenare soldon their retail stores.Theyoptfora verystrategicplacementpatternfortheirprivate brandsinthe store.They alwaysplace theirproductsjustbesidesthe nationalbrandedproducts,theyalsoattractbuyerbygiving heavydiscountsonit. Some Well-known Private Label Retailers Retailersin UKwere the innovatorsof Private Label inmanyaspects. Many retail storesinnovated relentlesslytocreate compellingandinspiringbrandstocompete head-onwithtraditional, national stalwartbrands.  Marks & Spencer Perhapsthe strongestsuccessstoryinthisregard wasthat of the Marks & Spencerbrandin the late 1980s and early1990s. It isa UK based clothingretailerknownforgoodbasicsthatcomplementedits
  4. 4. 4 offeringwithproprietarybrandedfoodproducts.M&Sdoesanexcellentjobwithitsprivate label,both inmaintainingitsreputationforconsistentqualityandmarketingpricesandproductsin store Mainstreamretailerscouldneitheremulate Marks& Spencer’spremiumquality,noritsprice.  Tesco Tescois a Britishmultinational retailerandmostof the bigexample for Private Label. The private labeledproductswere inventedhereonthe basisof whata workingclassfamilyonatight budgetwould needtobuy,apart from opportunitygivenbyretailer tothemina certainproductcategory. Tescocreatedan organics line,akid'sline and,perhapsmostimpressively,the Tesco Finestsub-brand. TescoFinest startedinready mealsandchilledfoods,where the retailerhasa natural advantage (these productsare difficulttoprepare anddistribute).Integral toitssuccesswasitsveryhighpremium-ness. The exceptional price andqualitywere well receivedbythe higherendconsumer.Itwasalsoevident that TescoFinestwasan encompassingpropositionandcouldstretchintoothercategories.Butrather than tryingto rule the world,Tescoselectivelyventuredintothosespecificareaswhere itcouldadd value.  Walmart About40 percentof productssoldin Walmartare private label store brands.Walmartbeganoffering private label brandsin1991, withthe launchof ‘Sam'sChoice’,aline of drinksproducedby Cott Beverages exclusivelyforWalmart.Sam'sChoice quicklybecame popularandby1993, itwas the third mostpopularbeverage brandinall of the UnitedStates. OtherWalmartbrandsinclude ‘GreatValue’ and ‘Equate’inthe US and Canada and ‘SmartPrice’inBritain. Greatvalue whichisnot onlythe biggest brand Wal-Martcarries, it's the biggestgrocerybrandin the entire US.  Target Target’s, the secondlargestdiscountretailercompanyinUS, ArcherFarms (private label brand) has successfullyestablisheditself asanaffordable luxuryconveniencebrand,offeringgourmetgoatcheese pizza,KeyLime Cookie Strawsandorganicmilk,all still inkeepingwiththe whole ‘cheapchic”Target thing.
  5. 5. 5 Everymajor grocerhas itsown private label brandlike Krogerstoressell Private Selection,Costcohas private label wines -Kirkland. Apartfromretail stores,these private label brandsare intrendamongthe e-commerce retailerstoo. Forsome tope-trailers,in-house brandsaccountforclose to25% of their sales. UK's largestonline fashionretailerASOSgets50% of the revenue fromitsprivate label brands. Rocket Internet’s Indianfashione-retail , ‘jabong’ alsolaunched4-5private label brands. Indian’slargest online retail Myntra have about10 private label brandslike ‘Dressberry’and‘HRX’ .They are the biggest sellingbrandsontheirsites,overtakingbrandslike Puma,Adidas&Levi’s. Theyare alsoplanningtoadd six more such brandsinthisyear. Consumersare definitelygivingretailerspermissiontogrow theirprivate labelbrands.Theycanbe said as the future leaderof the retail business.It’sprobablysafe toconclude the nextgenerationof super successful brandswill notcome fromthe name brands,butfrommore private label brand-focused retailers.Consumersseekingtosave some moneyintoughtimesmaybe fuelingthe currentgrowthin private label brands. We here atCrossProf.comhelpsyouconnectwiththe mosttrustedprofessionals whocan guide youwell tobuildyourprivate-labelbrand.Frommanufacturingprivate brand,itsin- house promotion tothe legal agreementinvolvedinit;advice forall these technical matterswill be givenbyour professionalshere.
  6. 6. 6 Ref: http://www.storebrandsdecisions.com/news/2009/06/13/store-brands-drive-differentiation- and-profit http://www.brandchannel.com/papers_review.asp?sp_id=360 http://www.retailnetgroup.com/public/MS_4.2011.pdf https://www.lightninglabels.com/articles/opportunity-private-labeling.htm http://www.indiebusinessnetwork.com/handmadechat-use-private-label-services-by-indie- business/ http://www.forbes.com/sites/scottdavis/2013/05/23/how-target-walgreens-and-home-depot- have-forever-changed-the-private-label-game/ http://www.plmainternational.com/industry-news/private-label-today http://www.businessweek.com/bwdaily/dnflash/content/mar2009/db20090316_585298.htm http://harvestpublicmedia.org/article/seeking-profits-private-labels Reyes,Sonia(August21,2006). "Study:Walmart Private BrandsAre CatchingOn".Archived fromthe original onDecember16, 2012. Retrieved December16, 2012. "Sam's Choice ClimbsBeverage BrandList – Walmart's Sam'sAmericanChoice Beverage Brand". DiscountStoreNews.October4, 1993. Retrieved April 20, 2007. http://www.business-standard.com/article/management/fight-or-play-in-private-label- 114042700607_1.html http://articles.economictimes.indiatimes.com/2014-08-10/news/52648273_1_e-commerce-industry- brands-fashion-retailer http://www.livemint.com/Companies/BJ5mBDA3xhhwjnhQpGqcyO/Myntra-makes-big-bets-with- private-labels.html

×