Private Labels, What Are They?

Basically, retailers like to concentrate on any or all 4 key groupings of private label lines. They are generics, copycats, premium store brands as well as value innovators. There are processes joined with each of these groupings. Private labels first came into the picture several decennial ago. As a cheap product they were presented as generics, often not carrying the name of the retailer, but normally the name of the product, like milk or butter. They offer lower prices on basic food products like canned goods competitively with the lowest cost product in the category. Retailers always avoid running price promotions because the product is already cheap and there is generally only one product to choose from. Generics are very common in many countries.

Generally, retailers tend to aim branded products that are already successful in the market and also produce a copycat that has almost similar ingredients, pricing, and packaging. Copycat retailers can thereby cash in the success of the branded goods without having to incur the costs joined with developing the product and researching the market. With copycat brands, retailers try to produce a similar product and offer it at a lower price than the valuable branded product. So the basic message to the customers that it is as good but cheaper.

As retailer strategies have changed the way, the ways of approaches have resulted in incorporating premium store brands. Retailers have observed the opportunity to differentiate their products and thereby aim a whole new section of the market. The modern trend is to develop high-quality products with distinctive, packaging, presented as full new product line by the retailer, targeted at competing with the top brands in the market. With a brand new pricing, the store brands compete against the premium branded goods in the market in a particular product range, but also give distinctive elements while benefiting from customer loyalty. Once a customer is loyal on a brand, he is more likely to believe other products in the range.

The fourth main category of private labels is valued an innovator. Retailers are following this process and always give focus on reducing the cost and processes to simplify the out turn and marketing of product ranges so that a product with good quality can be offered at a low price. The value innovator approach differs greatly to the copycat, generic and premium label approaches. There have many key principles that need to be followed for a successful approach. They are a limited number of production, good quality products at an affordable price, low costs of production and marketing. Many big brands offer a small list of products which is very limited compared to supermarkets which have thousand. Even many retailers cut prices to levels below those of traditional discounters. They offer an efficient, no-frills shopping experience with prices that are extremely competitive with the brand and retailers when quality is high.