To Compare Private-Label Brands and Manufacturer Brands for Overall Effectiveness for Retailers

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  • Topic: Private label, Marketing, Brand
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GRADUATE DIPLOMA FOR BUSINESS
RESEARCH SKILLS
August 2010

‘To compare private-label brands and manufacturer brands for overall effectiveness for retailers’

DATE OF SUBMISSION: 6 AUG 2010

TABLE OF CONTENTS HeadingPage
1) Introduction3

2) Literature Review4

3) Main body 7

4) Conclusion16

5) Bibliography17

1.0) Introduction
Over the last fifteen years, there has been much debate regarding different effectiveness of private-label brands and manufacturer brands. More and more companies all over the world are willing to devote finances to building strong brands. However, can brand power truly lead a retailer to success? 1.1) Aim of the research

The aim of this research is to analyze manufacturer and private-label brands, comparing their benefits and drawbacks to identify the overall effectiveness which lead to retailer success in the market. Since the priorities of private-label products have been increasing during the last 10 years, the retailers have often experienced how difficult it is to balance the overall benefits between manufacturer brands and private-labels products in their stores. It is general thesis that private-labels and manufacturer brands have both advantages and disadvantages. This paper concentrates around this area and is illustrated and explained with different case studies with different examples to identify overall effectiveness for retailers. This paper is limited to the retailers perspective and is covered through a literature review in particular about the reasons for retailers to get involved in private-labels and manufacturer brands which illustrated by examples and case studies 1.3) Background

Nowadays, some effective retailers have also developed their own private brands which are now in UK and many countries around the world. Private labels have been around for more than half a century and in the beginning were linked with low price and poor quality. Until the first decade of the 21st century this reflection has modified completely, thus nowadays some retailers sell private label products that are of equal or superior quality than many of well established brands (i.e., Tesco's Finest). Consumers are increasingly seeking for label brands’ products, as they are recognized as having higher quality similar to manufacturer brands’ products. The acceptance of private label products among worldwide customers is expected to rise within the next ten years. This leads to new and more complex competitive dynamics in retailers. The present economic situation has a negative impact on the bottom line of retailers which has persuade some retailers to increase the share of private-label products in their stores. According to the US report Private label 2009, point out that private label brands outpaced national brands in more than half of the markets measured. In the first quarter of 2009, private label represented 35% of Kroger unit sales, and 25% of Spartan Stores unit sales.

2.0) Literature review
This article reviews the literature concerning the introduction of comparing private-label brands with manufacturer brands for overall effectiveness for retailers. It is organized via common themes that emerge from benefits that retailers receive from involvement with private-labels and manufacturer brands. 2.1) Definitions

Manufacturer brand, also known as national brand, can be defined as a brand which is planned, produced and in the majority of instances, marketed by the supplier. The objective is to create an image and establish a demand for the product by communicating directly with the consumers, Grönroos (1991) and Randall (1997). According to DrawBaugh (2001), Private-label brand also sometimes identified as own-label, store brand or retailer own brand (ROB), can be defined as a...
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