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Private Labels

Private labels, also known as store brands, are brands that are developed and owned by retailers rather than national manufacturers. They allow retailers to differentiate themselves while improving margins. Private labels are gaining popularity globally but still have low market share in places like India and China. They offer lower prices than national brands while maintaining quality. This attracts price-sensitive customers and increases retailers' profits. However, private labels also face challenges like high competition and risk to the retailer's reputation if quality is not consistent. Overall, private labels create benefits for both customers and retailers if marketed and positioned effectively.

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269 views14 pages

Private Labels

Private labels, also known as store brands, are brands that are developed and owned by retailers rather than national manufacturers. They allow retailers to differentiate themselves while improving margins. Private labels are gaining popularity globally but still have low market share in places like India and China. They offer lower prices than national brands while maintaining quality. This attracts price-sensitive customers and increases retailers' profits. However, private labels also face challenges like high competition and risk to the retailer's reputation if quality is not consistent. Overall, private labels create benefits for both customers and retailers if marketed and positioned effectively.

Uploaded by

tanupriya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Private

Labels
PRIVATE LABELS
• A private label brand(also called a reseller, store, house, or distributor brand)is a brand
that retailers and wholesalers develop.
Example- Benetton, The Body Shop and Marks & Spencer, carry mostly own-brand
merchandise.
• Private label products are those manufactured by one company for sale under another
company's brand. Private-label goods are available in a wide range of industries from food
to cosmetics.
• In Europe & Canada, store brands account for 40 percent of the items
sold and in big markets like India, China and Brazil private label value
share is 5% or less.

• Private labels are rapidly gaining grounds in a way that has many
manufactures of name brands running scared .

• Recessions increase private label sales, and once some customers


switch to private label, they don’t always go back.

• In supermarkets, private labels are big sellers in milk and cheese ,


bread and baked goods, medications and remedies, paper products
etc.
ROLE OF PRIVATE LABELS

• These brands are more profitable .


• Private label products costs low, other costs like R&D,
advertising, sales promotion, and physical distribution are
much lower.
• Many price sensitive consumers prefer store brands in certain
categories.
Differentiati
on

Freedom to
BENEFIT create their
Lower price S OF
but higher own
PRIVATE marketing
margins LABEL plan

Freedom Strong
with consumer
pricing positionin
strategy g
1.Differentiation

Better
sales
Increase
opportuniti
the overall
es
profitabilit
y
2. Higher Margins

Increased supply
chain efficiencies

Eliminates the middle


man

Reduces cost of
delivery
3. FREEDOM TO CREATE OWN MARKETING PLAN
• Independence to the retailer to use its own innovative marketing
strategies
4. FREEDOM WITH PRICING STRATEGY
• Similar to the marketing strategy, private labels also gives the retailers
a chance to adopt their own pricing strategy

5. STRONG CUSTOMER POSITIONING


• Helps in developing the customer loyalty
• Since private labels are unique to one retail chain, there is
possibility for retailers to cultivate a sense of brand loyalty
NEED WANT DESIR
S S E

CATERED BY PRIVATE
LABELS
NEEDS:

• Not only beneficial for retailers but are equally beneficial to the customers.
• Private label products of same quality are available at lower prices.
• Example: Big Bazar sells 5 kg sugar under the brand name of Renuka which
is around 15-20% cheaper than other 5 kg packs available in the shop.

WANTS:
• Needs directed to specific objects/services that might satisfy the need
• Big Bazar has developed Koryo brand for catering the demand of the
customers in the category Microwave ovens and television.
DEMAND:

• When a private label becomes highly successful, it grows


from private label to private brand.
• The superior quality at lower price creates demand for the
product.
• Example John Miller from Pantaloons
Various Private Labels of
Big Bazar
DISADVANTAGES

• Highly competitive market.


• If even a single product doesn’t live up to the expectations
of the customers, then the image and brand value of the
retailer as a whole goes down.
• High inventory cost.
• Excessively dependent on the supplier.
CONCLUSION

• Private label are a quite attractive proposition because they


create a win-win situation for both the customer and
retailer.
• Lower prices and higher margins.
• Quality is comparable to that of national brands.
• More deep market penetration required.
• Innovative marketing and promotional activities are the
need of the hour.

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