Delivering value The products or services manufactured under one company for offer under another company’s brand termed as private label brands. Decision to embrace private label brand or not to by the large companies primarily depends on the company’s policy, long term goals and their market share with their current policies. The companies should be aware of the advantages and disadvantages of private label brands so as to determine the market share to gain. According to Ceullar the private label brands have emerged as popular and profitable marketing strategy not only in the United States but also in Europe (2002). Private label brands have the following advantages to the company’s employing it as a marketing strategy.
The private label brands enable the retailer to have control over their pivotal product hence their business (Muller, 2011). For a product facing high competition in the market, it is a vital way to market it; especially if the company has a competitive advantage over its competitors on the product. The company is able to gain considerably in product cost. Therefore, the retailer would be able to purchase other products and increase even the product quality.
The business reduces the competition for the brand since there are also no other business who can be able to trade on the name legally. The business may use the exclusive brand to be able to enter into supply to other businesses. This is a way to increase the market share of the company. Therefore, the business also increases its profits. The business may venture into selling the real quality and the mystique of their products. It would enable the company to achieve higher average selling prices (Muller, 2011). 2.
For a company which requires a wider market share it would be recommendable to employ private label brand; especially if it is a food retailer. The use of private label brands is employed widely such as the electronic stores, department stores and office supply. Most of the companies integrate the private labels through initiation of unique retail chain. Most of the retailers have incorporated brand loyalty to offer quality products to its clients. Through the technique most of the retailers have gained competition against the national brands. Private label is characterized by lower prices compared to national brands (Ceullar, 2002). therefore, the private label brands are cheaper to produce.
The business must ensure that they make the product cheaper to the retailers so as to gain a wide market share of the retailers. The company or business would therefore maximize on product quality with reduction in the cost of production. Some companies such as Wal-Mart sought the cheaply produce from the Chinese, to be able to reduce the cost of production. The retailers and businesses who wish to integrate private labels must also recognize the disadvantages that are associated with the process.
The disadvantages are lengthy period in working on quality with low cost, increased lead time for production, gaining the customers loyalty. The disadvantages if reduced the company or business would gain highly from the integration. The margins gained from these ventures ensure that the companies are capable to achieve their long term goal of a wide market share and also increase on their profit. References Muller F. (2011), The effect of private label brand strategies on consumer perceptions and attitudes, Retrieved from http: //arno. unimaas. nl/show. cgi? fid=22778, on 22 April 2012 Ceullar S.
(2002), Private Label Brands—A growth Opportunity for Retailers and Produce Suppliers, retrieved from http: //marketingpwt. dyson. cornell. edu/SmartMarketing/pdfs/cuellar2-02.pdf, on 22 April 2012