Private brand

Private brand

Private branding is when a large distribution channel member (usually a retailer), buys from a manufacturer in bulk and puts its own name on the product. This strategy is only practical when the retailer does very high levels of volume. The advantages to the retailer are:

  • more freedom and flexibility in pricing
  • more control over product attributes and quality
  • higher margins (or lower selling price)
  • eliminates much of the manufacturer's promotional costs

The advantages to the manufacturer are:

  • reduced promotional costs
  • stability of sales volume (at least while the contract is operative)

Literature

  • Kumar, Nirmalya; Steenkamp, Jan-Benedict E.M., Private Label Strategy - How to Meet the Store Brand Challenge. Harvard Business Press 2007

See also

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