A very important recent development in branding products has been the growth of own-label brands.
Own-label brands have become increasingly popular in recent years. This is due to a number of factors, including the growing popularity of discount retailers, the increasing awareness of the cost of name-brand products, and the growing demand for high-quality products at a lower price.
Own-label branding refers to the ranges of goods that have been launched by retailers under their own store name. Different low-quality products are sold under different brands created by the producer.
What is an own-label brand?
An own-label brand, also known as private label or store brand, is a product that is made and sold by a retailer under its own brand name. Own-label brands are often seen as a more affordable alternative to name-brand products.
It is very rare for the retailers to actually produce the goods. They buy them in with their own labels and brand names on. The goods are made by leading manufacturers who have their own well-known brands on the market that compete with the own-label brands.
Reasons for selling own-label brands
There are many reasons why retailers choose to sell own-label brands.
One reason is that they can often be sold at a lower price than name-brand products. This is because retailers do not have to pay for the brand name or the marketing costs associated with name-brand products.
Another reason why retailers choose to sell own-label brands is that they can have more control over the quality of the products. When a retailer owns the brand, it can work directly with the manufacturer to ensure that the products meet its quality standards.
Examples of own-label brands
Walmart has numerous own brands such as Sam’s Choice selling premium food products, Faded Glory for American clothing, Life for menswear and Metro 7 for womenswear, etc.
These are often cheaper than name-brand products sold in the Walmart hypermarkets.
Advantages of own-label branding
Here are some of the benefits of own-label brands:
- Affordability. Own-label brands are often seen as a more affordable alternative to name-brand products. Often little is spent on advertising as in-store promotions are often used instead. This is because retailers do not have to pay for the brand name or the marketing costs associated with name-brand products.
- Quality. Own-label brands can be just as high quality as name-brand products. In fact, many own-label brands are made by the same manufacturers as name-brand products.
- Variety. Retailers offer a wide variety of own-label brands. Each-own brand label appeals to different consumer groups and tastes. This gives consumers more choices and allows them to find products that meet their needs and budget.
- Use of spare capacity. Selling own-label brands can be a way of using up spare manufacturing capacity. For the retail stores, this strategy gives them a reasonable quality product, bought with bulk discounts, over which they have full marketing control.
Disadvantages of own-label branding
Here are some of the challenges of own-label brands:
- Competition. Own-label brands face competition from both name-brand products and other own-label brands. Retailers need to differentiate their own-label brands from the competition in order to be successful. It is because own-label brands can create a more competitive environment for the well-known brands, hence cannibalize one another.
- Brand awareness. Own-label brands often have lower brand awareness than name-brand products. This can make it difficult for retailers to sell their own-label brands.
- Quality control. Consumers often perceive own-label products to have a lower quality image. Retailers need to ensure that the quality of their own-label brands is consistent. This can be a challenge, as own-label brands are often made by different manufacturers.
In summary, own-label brands can be a valuable asset for retailers. They can help retailers to save money, offer high-quality products at a lower price, and increase brand awareness. However, retailers need to be aware of the challenges of own-label brands and take steps to mitigate those challenges.
