Private Label Brands

Private Label Brands

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Private Label Brands

Private label brands are products that are manufactured by one company and sold under another
company’s brand. Often positioned as lower cost alternatives to national brands, they have been
increasing in popularity over the past several years. Store brands such as Wal-Mart’s Equate or
Target’s Archer Farms are examples of private label brands.

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Private Label Brands

Private label brands are products that are made by one company and sold under
another company’s brand. They are associated to lower cost when compared to national
brands. There has been a tremendous increase in popularity over the past several years in the
use of these brands in American business setting (Lamb, Hair & McDaniel, 2012). The
following discussion, therefore, indulge in discussing if national brand companies should sell
their products to private brands, or should national brands stay clear of the private brands and
not get involved with the supply of products to these private labels. In addition, the paper
examines how the above activities play out in the international marketplace. Finally, it
discusses the importance of national brands versus private labels internationally.
National brand companies should sell their products to private brands because private
brands exclusively boost store loyalty. This is contrasted to ConAgra, to which it has many
retailers in the market, thereby decreasing customer loyalties to a specific retailer (Pradhan &
Pradhan, 2009). Private labels enhance the retailer’s image and draw in more customers.
Another reason is that private label brands have relatively lower prices for consumers (Fan,
2009). This is compared to national brands such as ConAgra, where retailers engage in low
competition that leads to higher prices for products. Private label brands are praised to their
ability to have fewer restrictions on merchandise display, promotion, display or pricing
(International Symposium on Advances in National Brands & Private Labels in Retailing &

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In Gázquez, 2014). National brands such as ConAgra dictate how their products are displayed
while private label brand such as Wal-Mart’s Equate does not (Cant, 2006). Finally private
label brands have potentially greater gross margin opportunities since vendors of national
brands, such as Ralston-Purina, assume the expenses of designing, manufacturing,
distribution as well as promoting the brand, therefore, retailers realize lower gross margins.
In international marketplace, national brands are selling their products to private
brands inform of labeling strategies. The label only bears the brand name (such as Macy’s) of
the particular store or any other party the store may choose for its private label program. This
labeling strategy in international market increases the negotiation power of the retailers and
gives better value to get the customer loyalties. Another way private brands are exhibiting in
international is through pricing strategy (Aronczyk, 2009). Target’s Archer farms, for
instance, is given authority to dictate the prices of its products. This pricing strategy enables
the product to be competitive in the global market by either increasing or decreasing prices
(Kurtz & Boone, 2014). Promoting strategies is another way in which private brands are
taking over national brands in the international market. Macy’s, for instance, has marketing
programs that aim to improve the image of the national brand so as to meet specific customer
needs.
There are varied significances of national brands versus private label brands
internationally. One of the significances is that product differentiation is derived. Price
differentiation is observed by supermarkets offering more premiums and organic brands such
as Safeway’s SELECT and Organics. This had effect on overall price and quality
competition. Due to absorption of heavy promotion costs, product companies of both national
and private brands are finding themselves providing discounts to their customers to market
their products. Another importance is going local (Anandan, 2009). After realizing that
private brands are giving national brands a hectic competition, national brands, such as

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ConAgra, are devising on how to identify products that have priorities at the local levels. This
will make citizens of the home country get services first before being sold to another
destination.
In summary, private and national brands will always remain in a vicious cycle of
competition in an attempt to find which of them is the favorite route to reach customers. In
international market arena, these two brands exhibit themselves through pricing, promotion
and labeling strategies. At the end of the day, the competition will make sure that customers
get quality services at cheaper prices.

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References

Anandan, C. (2009). Product management. New Delhi: Tata McGraw-Hill Education.
Aronczyk, M. (2009). How to do things with brands: Uses of national identity. Canadian
Journal of Communication, 34(2), 291–296.
Cant, M. C. (2006). Marketing management. Cape Town, South Africa: Juta.
Fan, Y. (2009). Branding the nation: Towards a better understanding. Brunel Business School