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The Advantage of Private Labels in the Market

The success obtained by the owners of supermarkets with their own brands has led them to dabble with other brand strategies outside of the supermarket. The French chain Carrefour, for example, uses blank labels by tagging them with the number one (1) for lines of bakery, delicatessen, grains, food, meat and dairy. These alternate brands compete with each other on the same shelves. When it comes to the truth, the money paid by the blank labels goes to the same place, i.e., the pockets of the owners of the supermarkets. About 40% of the products that are sold at Wal-Mart, the world’s largest retail store, are blank labels. The company was founded by Sam Walton in 1962 and has publicly quoted on the New York Stock Exchange since 1972.

Wal-Mart began offering blank labels in 1991 with the launch of Sam’s Choice, a drink produced exclusively for this string by Cott Beverages. The drink became popular quickly and in 1993 Sam’s Choice was the third most popular beverage brand in United States. The name of this brand was extended to other lines of food products.

“Premium price”

Many dealers who sell their own brands and its private brands have opted to reduce the number of brands exhibiting on their floors, in order to apply another modality that benefits their income significantly. It’s ‘premium price’ brands, of a little-known manufacturer, which attempts to introduce a new brand to the market. This strategy not only produces an economic benefit, but favors their own brands and reduce the possibilities of t6he sale of the brands. This ‘replacement of the brands’ action by ‘premium price’ is what we have called: “brand strategy”.

“Premium price” brands have greater efficiency in markets where the consumer does not require special attributes of the brand, but that tends to change their shopping by “saving impulses”. On the other hand, the application of this modality generates greater traffic in the establishment because they reduce the cost of search for low prices and meet price-sensitive demand.

The implementation of these strategies allows the retail business owners:
• Change the concept that the everyday customer has the Distributor as the cheaper brands.
• Identify the large area, with the need that all consumers have to pay the money.
• Get the buyer loyalty.

The emergence of these modalities is largely due to the loss of the purchasing power of the consumer. According to experts, the value of a product’s own brand is on average 33% less than the factory marks. This factor, coupled with the knowledge that is about brands and the wide range of similar products of lower price, makes tipping of the consumer by supermarket brands.

Traditional trademarks or brands manufacture their products directly. Its business consists exclusively in the creation of specific products, providing practical solutions for the consumer. A consumer can purchase several items tagged with the name of the supermarket, but there are certain products that do not change by another different brand. If you can’t find it you desist from buying and prefer to go to another point that if you have it.

Brands put special emphasis on using the most modern technologies of packaging and the most sophisticated controls of quality for its products. Nestlé, for example, developed the first lactose flour for babies. With this product, in 1867, saved to a newborn. Nestlé is recognized as the first world power. Quaker is a U.S. food brand founded in 1901, which is dedicated to the manufacture of products made from oats. The company has diversified into numerous branches, including cereals for breakfast, drinks and various food products.

Knorr is another  traditional marks of the of factory, recognized around the world by their products of broths and soups in cubes, and also by seasonings, sauces and meals of fast preparation. Importance of traditional brands is important to note that to spread the name of the supermarket in too many categories of products can disrupt your entire image. Today’s consumers are not stupid. Quite rightly do not believe that a “store” can offer the same excellent quality of all the products displayed in the same establishment. The reason for which distribution channels should have on their shelves traditional brands, because these have managed to, over time, is build a great reputation and a loyalty of consumers who exceed the price. Consumers demand them in any supermarket for small that is.

About Ricardo Gaitán

Publicista. Magister en Dirección de Marketing y Ventas, Escuela de Negocios de la Universidad de San Pablo, de Madrid, España. Mas de 25 años de experiencia como creativo en importantes agencias multinacionales como: JWT, Leo Burnett, Ted Bates, Young & Rubicam y Hoguín & Asociados. Analista de marca y columnista de varios medios.

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