In the 1980’s, a new form of product labeling emerged. Typically recognized by white packaging, generic or store-brand goods gave consumers additional product choices that required them to focus on the difference between quality and cost.

Changes to Private Label Goods

Since that time, store-brand items, now referred to as private label, have transformed in ways that benefit not only the customer, but the business as well. Consumer opinions of private label lines were changed when it became the focus of businesses to market better private label goods. These changes have caused many customers, once loyal to national brand products, to change their buying behaviors. No longer perceiving a decrease in value, the decision to purchase a private label is made because the consumer sees little or no difference between the two product lines.

Expense of Private Label Products

Private label items generally cost less to produce. A national brand will often require a higher price tag of 20% or more than the same private label product. This premium is often due to:

• Time and money to ship product from warehouse to distributor, and then from distributor to individual businesses
• Advertising and marketing costs
• Higher overhead for business-related expenses

The significance of this difference is such that retailers can still make a profit even when they pass on the lower price to their customers.

Benefits of Private Labeling

Developing a line of private label products can benefit a business in ways such as the following:

• Control of product factors
  • Utilizing information based on customer preference, private label offers greater control over the line of products, including considerations such as:
    • Pricing
    • Size
    • Packaging
    • Production
    • Marketing
    • Distribution
    • Services
    • Profits
  • Necessary adjustments generated by changing customer recommendations can be more easily attained, creating greater demand of product
• Branding
  • Provides the ability to create a personalized image reflective of your company
    • Recognition of image helps to establish, build, and maintain customer base and secure customer loyalty
  • Creating a successful private label brand benefits retailers and customers:
    • Offers additional product lines for choice
    • Offers additional product lines that meet customer needs and wants
    • Improves the chance for sale opportunities
    • Personalizes the customer’s shopping experience
    • Increases customer loyalty
• Marketing
  • Offers control of the way private label is marketed and delivered to client
  • The increased ability to more directly focus on customer demographics enhances the ability to efficiently market the product
  • Ability to compete with pricing of brand name products creates better sales opportunities

Private label provides retailers with the opportunity to establish customer loyalty by offering quality products that provide what the client wants with what they need. For more information on the benefits of private labeling your own products, contact your Covetrus representative at 855.724.3461 today.

Sources:

http://www.propertyware.com/blog/the-growing-success-of-private-label-brands/

http://noon-intl.com/blog/the-advantages-of-using-private-label-products/