November 18, 2020
Dilemma or Decision?
Private Label or National Brand?
This is the dilemma faced by consumers, retailers and by manufacturers.
Today, we will address the concerns for consumers, by explaining the Logic behind Private Label and National Brand. So that you can make a well-informed decision and choose strategically.
Private Label Brand
Private Label Brand is manufactured by one company, for another company under the brand name of that (another) company.
When a manufacturer produces a brand for a retailer, it is known as the Private Label of the retailer or a Store Brand.
Inside a supermarket, we see ample evidence of Store Brands… In the middle east, all the leading retailers such as LuLu, Carrefour, Union Coop, Abu Dhabi Coop, Panda, have Store Brands. In North America, we see Walmart, Kroger and even Amazon have their own private labels.
Then, there are the brands that we all are familiar with e.g. Ariel, Dove, Colgate, Toblerone… The brands produced by FMCG giants such as P&G, Unilever, Colgate Palmolive, Kraft. These are all National Brands.
With a plethora of brands available on supermarket shelves, consumers are faced with the dilemma of plenty. In the fight among the mighty, the choice is difficult.
Pros & Cons
So, here are the Pros & Cons for Consumers, for choosing between the Store Brand and the National Brand.
|Private Label / Store Brand||National Brand|
|Brand Equity||Is as good as the Equity of the Retailer.||Has built Equity over the years, making a strong association with the core benefit of the brand.|
|Research & Development (R&D)||Retailer defines the standards for developing its store brand, with the manufacturer. – The R&D support from the manufacturer is crucial to make a product that meets with the set standards. ||The R&D activity is more dynamic and develops standards for the National Brand to stay ahead of the competitors. – The new products are also placed among target consumers for Testing and the feedback is incorporated to improve the product.|
|Price||Typically, cheaper than the national brands||Higher price.|
|Value||Offers Good Value, driven by cheaper price||Offers Good Value, driven by better quality|
|Availability||Only in the outlets of the retailer||Available nationally and internationally, across stores|
|Variety||Limited number of variants, sizes & packs, that are most preferred by the store consumers.||A variety of variants, sizes, packs that caters to all the national & international consumers|
Our research indicates that the consumers prefer to buy Private Label or Store Brands for products that are commodities, mass products, that are not strongly differentiated. e.g. lentils & spices. While consumers buy National Brands with whom they enjoy an emotional bonding, association (Chocolates) or where the R&D involvement is crucial, e.g. Baby Food and Fashion.
We hope, this understanding will help you to choose the brand of your choice that meets with your needs better than any other brand.