Manufacturing is a core part of business and quality starts from this function. Product quality is a key competitive advantage for the most companies. For this purpose, organization are using many standards to insure quality on every step. Not every company is able to manufacture its product by itself. For compensating this subject, companies use different methods i.e. outsourcing manufacture department, joint venture for production or Private Branding.
Private Branding, also discussed to as private labeling, is the process in which company labels products under a company own brand name that doesn’t actually manufacture the products. Many industries are now using this technique. Large retail stores as well as small businesses now use private branding to increase value for their customers and promote sales and growth. For small retailers and business owners it is fine to know the benefits of using Private Branding technique.
Many giants retail stores finance in private label products so they can enjoy their own brands without taking risk of actually manufacturing products with quality and standards. You can check by your own the websites of multinational retail stores, Walmart and Metro Cash & Carry. Number of products are available under their own brand names. Metro is offering office solutions under its own brand name SIGMA. Under the brand name “Hi-Line” Metro Cash & Carry offers all guest solution for hotels, restaurants and hostels. Verity of packed food is available under the brand name of “Fine Food”. One advantage of private branding is, you can brand your products with your selected features and characteristics. By private branding, you can control price and quality over your competitors. Metro Cash & Carry is enjoying same advantage.
Different studies are available about Private Branding.
- Above 60 percent of consumers accept that private brands offer better value than national & recognized brands.
- Above 46 percent agree that they often cannot recognize the difference between private and national or established brands.
- More than 48 percent agree that they mostly prefer private brands over national brands.
- More than 39 percent agree that private brands offer more unique qualities and items which makes private brands more motivating than national brands.
Nike is a good example of private branding. They outsourced their production department and they get manufactured their products from the host country market. Private branding helps Nike to keep focus on marketing and distribution system. Other common examples are seen in the clothing industry. Local brands like Fore-Cast, Explore, G-Star Raw and many other are using the same technique. Private Branding helps company to relax from production side and keep interest in marketing and distribution side.
Manufacturing is quite difficult task to perform in smooth ways. For producing quality products, you need quality raw materials, machinery and experts to manufacture goods but private branding supports you to ignore all above situations and focus on just selling the products. Different companies are operating in the market who perform manufacturing tasks on behalf of others. Private Branding, mostly uses for generic brands. Low budget consumers prefer generic brands because of limited budget. Retailers with their private own brands can fit products to their local customer’s needs and will even have an opinion from customer’s side.