Private Label Brands vs Public
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
According to a recent study by the Nielsen Company (Wong,
2008), 72% of respondents surveyed viewed private label brands as equivalent in
quality to name brands Rising commodity prices and consumer desire to get the
best value for their money are driving the growth of private labels As a
result, some national brands have adopted a strategy of “if you can’t beat
them, join them,” by making products for these private labels For
example, national brands such as Ralston-Purina, ConAgra, and Borden have all
admitted to supplying products to various retailers to be used as private
brands Supporters of this strategy contend that it creates volume sales and
profitability for national brands Furthermore, businesses contend that if they
do not supply retailers, someone else will, causing national brands to lose
volume from private label sales and thereby jeopardizing a national brand
company’s profit position
Other marketing experts disagree They argue that consumers
may become confused about the quality of the national brands Opponents suggest
that consumers may decide that national and private brands are essentially the
same and hence, over time, private label brands may become as powerful as
national brands These critics contend that the long-term prognosis for
national brand companies is not good if those companies continue with this
strategy of supplying private labels
Respond to the following:
* Do you think 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?
* How does this play out in the international marketplace?
What is the importance of national brands versus private labels
internationally?
* Defend your answer with specific examples