What are Own brands?
Own brands are the names given to consumer’ products produced by, or on behalf of distributors and sold under the distributor’s own name or trademark through the distributor’s own outlet. The development of own brands has strengthened the position of large scale retailers as they gain extra control over the value chain. Own-brands are also known as own-label brands.
Types of own brands
There are four main types of own brands: Generic, Price-led retailer brand, quality led own brand, and exclusive own-brand.
1. Generic: Generic own-brands are plain packaging with no branding but may have the retailer’s name. They are unadvertised and offered as a lower grade alternative purchase. Generic brands are more popular in poorer areas and at times of recession.
2. Price-led retailer brand: Price-led retailer brand carries the name of the retailer. The packaging is designed overtly to communicate the impression of value and of lower price. The strategy is to provide better value than the manufacturers’ brands by setting a lower price. Price-led retailer brand is followed for products purchased in large volume.
3. Quality led own brand: Quality led own brand focuses on quality of the brand. The packaging is designed to reflect product quality. It competes directly with established manufacturer brands. This is positioned as a close competitor. It builds brand image of retailer, expands product assortment and increases margin.
4. Exclusive own-brand: Exclusive own brand is manufacturer based. The manufacturer produces exclusive own brands to be sold through one retailer. This is a niche strategy based upon differentiation to earn higher margins.
Advantage of own brands
The following are the advantages available from own-brand.
1. Boosts store patronage: A good quality own brand can boost store patronage. Improved store loyalty occurs as consumers seek out a popular own-brand. The retailer’s brand on the package acts as a constant reminder when the product is used at home. Own-brands reinforce brand loyalty.
2. Offers greater price flexibility: Goods carrying an own label cannot be directly compared on attributes in other retail outlets. Own label offers greater price flexibility. It does not need to be repriced often.
3. Enhances store image: When the own brand is well received by consumers, the store image is enhanced. The two reinforce each other as there is a circular reinforcement effect of one on the other.
4. Attracts high levels of custom: Own brand products offer advantages over the competition. This aspect will attract lot of customers and offer consumers a wide choice. They can purchase from a wide range of the store’s products. Higher profits occur through increased sales.
5. Free from restrictions: Retailers are free to follow their own methods of display, promotion, pricing etc. But manufacturer’s brands are subject to the conditions imposed by the manufacturers.
6. Becomes powerful and competes with manufacturer’s brands: Own brands offered by super markets become powerful in the market. They place pressure on some of the major branded manufacturers to offer concessions in order to avoid their brands being delisted.
7. Fills gaps left by the competition: Own brands are used to fill gaps left by the competition. They are also positioned to appeal to the specific tastes of a store’s customers.
8. Lowers launch and distribution costs: The distribution channels of conventional manufacturers are rather lengthy. So, launch and distribution costs for new products are higher. But store brands are sold directly to stores’ customers. Such direct channel lowers the distribution costs of own brands.