Assessing the vulnerability of private label brands

Abstract

Private label brands may be in danger as a result of recent changes in the marketing strategies used by private label firms. The primary competitive advantage of private label brands, good quality at low prices, may be lost if private label firms continue to modify and expand how their brands are marketed. Specifically, changes in private label brands′ advertising, packaging, sales promotion, and product improvement strategies indicate that private label brands are moving closer than ever to manufacturer brand status. To the extent that these changes result in higher average retail prices and/or lower gross margins for retailers, the advantages of private brands to both consumers and distributors will diminish, illustrating that the historical “wheel of retailing” hypothesis may be applicable to private label brands. Investigates the aforementioned trends and provides suggestions for manufacturers and retailers for future brand management strategies.

Private label competition: the perspective of Swedish branded goods manufacturers

“…A company's benefits and drawbacks as the result of a pursued strategy is represented either as a positive (that is ''+'', which identifies a perceived benefit) or a negative (that is ''-'', which indicates a perceived drawback). All the strategic actions pursued by the companies identified in this investigation were also identified in previous research (see, for example, Glemet and Mira, 1993;Halstead and Ward, 1995;Hoch, 1996;Miller, 1995;Montezemolo, 1997;Parker and Kim, 1995;Quelch and Harding, 1996).…”

“…The main advantages are that excess manufacturing capacity is utilized (cf. Glemet and Mira, 1993;Halstead and Ward, 1995;Hoch, 1996;Quelch and Harding, 1996), the manufacturer-distributor relationship is strengthened (Hoch, 1996) and competition by private label brands is reduced since it indirectly assists in keeping the prices of manufacturer brands at a low level (Halstead and Ward, 1995). In addition, by producing private labels, production experience is increased and both the unit manufacturing and distribution costs are lowered.…”

“…De Chernatony and McDonald, 1998;Halstead and Ward, 1995;Hoch, 1996;Quelch and Harding, 1996). There is also the risk of the original strategy becoming confused.…”

“…A segment of research has also examined how the BGMs react towards increased private label competition (see Garretson et al, 2002;Halstead and Ward, 1995;Hoch, 1996;Quelch and Harding, 1996). Hoch (1996) argues for the delicate nature of this issue because the BGMs time must think and act differently towards private labels than towards other manufacturer brands due to the fact that the producers of the private label brands might be customers and competitors at the same time.…”

Análise das vantagens e desvantagens das marcas próprias do atacado para os clientes varejistas

“…As mudanças ocorridas nas empresas que possuem marcas próprias podem representar uma ameaça estratégica na medida em que as marcas próprias começam a se mover para um status de marca de fabricante (HALSTEAD; WARD, 1995). A incorporação de muitas funções pelo distribuidor pode tornar a estratégia não mais desejável.…”