Private label branding in retail marketing is another fruitful raised area for the retailers to stand in the modern competitive environment. The process of producing the products which are controlled and marketed by retailers with their name is called as a private label branding. Let’s have a look into this in detail.
What is Private Label Brand?
Private label branding is the process of manufacturing the goods or products by a company or third party and sold these products under the name or label of the retailers. In this case, the retailer is responsible for the labeling everything about the product like ingredient, dates, price, usage etc. Private label brands are widely available in the local market with the range of product lines variety such as food, cosmetics, household items, personal care etc.
These products are the best alternative for nationally recognized brands as it is less expensive with the same quality and value. It can be called as a good value for money on par to the big brands. Sometimes, retailers are facing a problem of misconception about the quality of the private label brand products in public as it is available at low cost. So let’s have a look at Advantages and disadvantages of private label branding in retail marketing environment:
Advantages of Private Label Branding:
· Regulate and maintain flexibility over the pricing:
Control over the pricing is the main advantage of private label branding. When manufacturer transfers the ownership of the products or goods, it gives the full freedom and flexibility over the pricing decisions to the retailers. So it’s beneficial for retailers to regulate price on products.
· Higher profit margin:
As the retailers can regulate the price of these products or goods, they can earn the higher margin of profit by adding the cost to it. There is a full liberty to the retailers for their cost applying on the products.
· Wide range of product assortment:
Private label branding always aiming for expanding its trade-in market, therefore they are offering a wide range and variety of products to fulfill the needs of the consumers. Retailers are always aware of the regular supply of the product hence private brands have always resolved the problem by offering huge assortments of products.
· Cost effective promotion:
Private label brands can bear the cost of promotion and packaging as the retailers themselves have the ownership of the goods. In fact, putting the products in the store under the name of retailers gives the chance to build own unique image and identity in a market with no extra promotional cost.
· Low Competition:
Private label products are always at a low price as compared to the nationally recognized brands. It gives the chance to build competitive advantage for retailers to stand in retail market reduce the competition by offering a low-cost product with same quality and value.
Disadvantages of Private Label Branding:
· Production dependency:
In a private branding, the products are manufactured by the third party, not the retailers so, retailers have depended upon the manufacturer all the time in a production process. It’s very crucial for the retailer to deal with the well-established manufacturer to avoid any obstacles.
· Low accessibility:
Nationally recognized brands are already established in the competitive market environment and they have upper hands. These products are available anywhere in the region. But in case of private label products, these are only available at the limited retail store and give a reason to low accessibility.
· Low Quality offering:
Sometimes but not often, There may be bare low-quality offerings made at a lower cost of production because not having a control over the process of production which leads to getting tough to build a loyalty among the consumers.
Even if there are some drawbacks, private label branding is still a prominent way of retail marketing to earn the benefits for the retailers.
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