Private Label vs Branded Products: 6 insights you can use

Share This:

It wasn’t that long ago that private label brands were little more than slightly lower quality generic products. They came in plain packages with big clunky letters stating the package’s contents in the simplest possible terms.

While the days of plain and block lettered packaging are essentially long-gone, the private label brand strategy some retailers employ in order to successfully compete with branded products hasn’t kept pace with consumers’ demands and expectations. Without such a strategy, retailers are frequently short-changing themselves at a time when product leverage is more important than ever.

private brand strategy cta

startup-photosA Private Label Brand Strategy Cheat-sheet

There is no one magic bullet for achieving private label brand success. And in examining the approaches employed by the companies who excel at building competitive private label sales, a number of crucial factors stand out.

1. Project goal 

For a private label brand strategy to be successful, it must begin with a core intent of the overall effort. Simply offering a lower-priced alternative is no longer sufficient for today’s increasingly sophisticated and informed consumer. This can be anything from establishing a clearly differentiated cohort of product brands which targeted consumers can easily identify, to leveraging brands as springboards for innovation. The most important element here is to attempt to stay ahead of evolving trends and changes in an identified customer base. Sears’ Kenmore brand is an example of partnering with key manufacturers to implement unique features (even before the manufacturer that makes the appliance implements them) in order to differentiate and lure customers to the Kenmore Brand.

2. Customer identity 

Having a clear image of your target customer is crucial to a dynamic private label brand strategy. Is the goal to retain existing customers, pull in new ones – or a combination of both? Have you identified consumer dissatisfaction with an existing branded product that opens the door for your private label? Each of these objectives requires two things: understanding the demographic who currently purchases your product, and identifying where any gaps might be in your target market. An in-depth understanding of your market’s demographics will allow you to pinpoint your target with greater precision.

3. Emotional involvement

One of the most important lessons that Steve Jobs’ career has taught the business world is the vital importance of style. How a consumer feels about a product is something that every private label brand strategy must take very seriously. The simple truth is that consumers tend to gravitate toward, and stay loyal to, brands that succeed in creating an emotional connection with them. Companies with exclusive brands that succeed can all attest to the importance of this component. Whole Foods 360 and Safeway’s Organics brands are two prime examples of this approach. These are two examples of how retailers have figured out what consumers are looking for and developed a private label response that can compete with any branded product on the market today. They have succeeded in two ways: understanding consumer desires and developing a seductive product line – aesthetically and substantively – to meet it.

4. Develop clear borders 

One mistake several retailers have made over the last few years with their private label brand strategy is to over-saturate the identity. Seeing success in one area has led some retailers to extend that private label too broadly throughout their stores: both across product lines and up and down the price range offered. The danger here is to dilute the impact of the private label to such a degree that it loses its special appeal to consumers. Successful approaches have applied private labels with careful logic that corresponds to the judicious use of product positioning. This, of course, works hand-in-hand with the already mentioned elements of the overall strategy.

5. Understand currents

That is, where things work and why. Understanding consumers needs and desires is one thing – and an important one – but right next it comes the importance of where to offer your private label brands to maximize their effectiveness. Will they be just on the shelves of your brick and mortar locations? Or online too? Or, conversely, only online? And if you have decided your private label brand strategy calls for utilizing multiple channels, will they each employ a uniform presentation or one customized to fit each channel? This approach to your strategy requires careful attention to balancing the diversity that accompanies going beyond one style offering in just one venue. It can call for a tricky back and forth period of experimentation before the right balance is struck, but the payoff can be significant and is certainly worth the effort.

6. Innovation

Private label brand strategy is perfectly suited for – and works best when combined with – an eye toward uniqueness, mesmerization, and innovation. Such a strategy works quite well in collaboration independent manufacturers and vendors who are more than willing to join forces to push the envelope on enhancing products that tantalize consumer desires and needs. Keeping an eye out for such opportunities is the essence of both a win-win approach and a key factor in what drives successful private label viability.

 

The bottom line is that a successful private label brand strategy is, at heart, very adept at mimicking the marketing approaches employed by national branded products that have come to set industry standards for consumers.

Consistent branding and well-thought-out marketing are what underlie branded success – and will therefore be central for private label brands as well.

Do you have experience with private label products?  For you, what is the most important factor to consider vs. branded products?