At first, products marketed using a private label or “Store Brand” (like “President’s ChoiceTM“) were seen as a low-cost replacement for name brand products. People bought private label brands because they were less expensive, but didn’t flock to them in droves or identify much with the brand. Using “No NameTM” products wasn’t exactly something to brag about.
This situation has changed. Over time, private label products have saturated the marketplace and are often as good as the “name” brands. There’s no shame in them anymore (if there ever really was) and many people actually swear by them.
This is good for both buyers and retailers. Private labels are in direct competition with the bigger brands instead of holding a “bargain buyers” niche, which allows retailers to raise prices while still remaining relatively inexpensive because of reduced costs in areas like packaging and advertising. Private label products are promoted by implication every time the parent company is promoted, whether or not they’re specifically named in flyers or on television, and nobody expects fancy packaging from them.
“Taking a broader view of the last year’s performance, in all U.S. retail outlets, including discounters and Wal-Mart Stores, store brands increased by nearly 2% while dollar share advanced by almost half a point. Overall sales were $88.5 billion, another new record. Store brands now account for almost one out of every four items sold in the country’s supermarkets, drug chains and discount stores, according to The Nielsen Company.
While those results are compelling enough, an even more accurate sales figure for all private label food and non-food grocery sales in the U.S. would be far higher. There was an estimated $15 to $20 billion in private label sales in channels that are not traditionally counted, such as warehouse clubs, limited assortment/box stores, convenience stores and dollar stores, producing a grand total that exceeded $100 billion during 2010.”
— Private Label Manufacture Association (PLMA)
It’s not just giant retailers who can make use of private label brands. Through the use of things like call centers and virtual assistants, businesses in the service sector can also extend their capabilities and offer new services by outsourcing, while maintaining their own brand identity and enhancing the reach of their businesses.
This must be done with care, however; it may take some time and experimentation to find an outsourcing firm, virtual assistant, or call center that meets your standards. It also takes careful planning to figure out how to integrate any new service offering with your existing business model.
The outsourcing angle is still considered risky by most, and some view it as morally wrong or unpatriotic to outsource overseas. If you can handle the risk and uncertainty, and you’re sure the outsourced service is an enhancement and not a distraction, it can pay off.
The risks are somewhat reduced when dealing with physical products. In the recent past, a private label might not have enhanced your brand, but with effective research and forethought, private labels today offer a credible means of extending your business scope. There are also credible sources of information on private labels, and trusted directories you can turn to for information.
The name of your brand plays a huge part in distinguishing your products from competitors. Creating private label items that complement your core offerings can increase the perceived value of your product by lending “weight” to your brand and giving you more contexts in which to promote it.
Celebrities have also been getting in on the act in increasing numbers, Ivanka Trump (surprise surprise) has her own private label brand, so does Justin Bieber, Jessica Simpson, Fergie, Gwen Stefani, Paris Hilton; the list goes on.
If celebrities and the biggest retailers in North America routinely add private label products to their marketing toolbox, there’s something to it (or they wouldn’t do it). Imitating the giants can put your brand, at least in people’s perceptions, in the same ballpark. That’s not the only reason to use private labels, but it’s a persuasive example, one of many potential benefits.
Many manufacturers have entire catalogs of products specifically produced for the private label market. If you’re running a product-focused web site or traditional retailer, it’s well worth your while to investigate the possibilities of private labels as a way to expand your business and maybe get some free marketing in the bargain.
Small local press, like newspapers, local magazines, or even television will often run feel-good stories about the entrepreneurs in the area. Launching a new product line is a great way to get some attention.
Also, if your site’s main product is a big-ticket item or something available elsewhere for less, selling complementary products like accessories can sometimes save you the sale. People prefer the convenience of “one stop shopping” even online, and will often purchase a higher-priced item from a store that provides all the accessories in one place, even though the individual items can be purchased elsewhere for less.
This tactic doesn’t require you to slap your own label onto everything, but it’s such a great branding opportunity that if you can, you should.
Click on the links and pictures to find more information about Private Labeling. I have no affiliation with any of these sources.