Private labeling is something that gained prominence during the recessionin 1980s. Consumers switched from expensive products to private labels that were lower in costs but almost equal in quality.
Now, the private labeling is widespread among various channels like supermarkets, drugstores etc. and co-exist with national branding. Nonetheless, private labels have to constantly find ways to stay in or ahead of the competition.
Improving quality of private labels
One key strategy to adopt and succeed with private branding would be to strive towards improving the quality of private labels constantly. In the past, there was a distinct gap in quality between branded products and private brands.
Constantly improving the quality of products under private labeling will surely help narrow the gap between products of national branding and private labels. This may increase consumer confidence and make them switch to purchasing private labels instead. As a 1990 Gallup study showed, 85% of consumers felt that quality was an important factor in their decision to purchase a private label.
All in the presentation
Moving on from the quality perspective to succeed with private labeling, retailers can also play a considerable role. As a confidence building measure, retailers should ensure that packaging is done carefully. Any private label should be packaged as professionally as a national brand. These include elements like logo, labeling and branding before the products are placed for sale on the shelves.
Once these have been achieved, marketing efforts should be undertaken. Private labels can be featured in the company’s internal marketing channels like emails to customers, website and on billboards. Offering sample products for customers to try will also greatly benefit a private label.
It is important to create a unique identity in terms of product differentiation to stand out from the rest of the products in the category. These efforts from the retailers would help their private labels stay in the competition,eventually succeed, become more profitable and become bigger brands.
Considering the consumer
Another way of succeeding with private labelling is by keeping the consumer perspective in mind. Certain products belonging to national brands have a strong consumer loyalty. This means, even if private labels venture into those products, the sales figures may remain low.
Consumers may have high brand loyalty for reputed national brands for items like chocolates and coffee. In such a situation, private labels may struggle in their respective categories. By doing research, manufacturers may find out products in which brand loyalty among consumers can be shifted from one brand to another and invest in them. Low risk products, wherein consumers will base their purchasing decision on price, will prove successful for private labels.
There are some products wherein the quality across brands is almost at equal footing. These products vary minimally in terms of taste like frozen French fries and canned food. Since these products are manufactured using the technology which does not differ much to that of established brands, the quality or output rendered are unlikely to differ much either.
Manufacturers can then tap on these categories and create a product, which is price-competitive. This will surely help capture and increase the consumer base.In this case, the element of price may come into play. Consumers are likely to choose private labels when their relative prices are lower.Making such products attractive and competitive in terms of pricing is likely to increase the sales of private labels.
Essentially, private labels have to do the competitive analysis, consider price and adopting simply ways of marketing that are cost effective but surely help them take a step forward towards success.