What are Private Brands?

Broad definition of private label:

Private label

Broad definition of private label:

Private Brand (PB) is a brand created and used by a wholesaler or retailer to distinguish goods or services from other brands.

Chinese name

Private label

Foreign name

Private Brand

Short name

PB

Also known as

Store Brand

Function

Get economies of scale and reduce the cost of goods sold

Although domestic supermarket chains have developed for many years, many people in the industry have not really understood their own brands. When it comes to private label, most people think of it as a retailer brand or a store brand. In fact, the concept of the early private brand was based on the market environment at that time, and was aimed at the manufacturer's brand. Private brands generally refer to brands created and owned by distributors or middlemen, which can be divided into wholesaler brands and retailer brands. Among them, the wholesaler brand is a private label owned by a company whose main income comes from the wholesale business. In this regard, there is little research in the domestic academic circle.

With the transformation of domestic commodity circulation channels, manufacturers, wholesalers, and retailers have more of a market pattern among you and me; the rapid development of e-commerce and the existence of virtual stores have extended The concept of a store in the traditional sense and the concept of a wholesaler and a retailer in the traditional sense are becoming increasingly rigid. The concept of private label should also keep pace with the development of the market. The narrow traditional definition of private label does not include the wholesaler brand, only the private label of the product. After all, private labels can be both product brands and service brands.

Narrow definition of private label:

Private Brand (PB), also known as store brand, refers to products that are controlled by the retail company from design, raw materials, production to distribution, and are produced by suppliers designated by retail companies. Sell at your own store. ^[1]

There are two basic ways to implement your own brand marketing strategy:

1. The retail enterprise entrusts the producer to manufacture. That is, commercial retail enterprises design their own products in terms of quality, specifications, types, raw materials, packaging, etc. according to market dynamics, and then entrust production enterprises to manufacture according to design requirements and use their own brands when selling. Its characteristics are: commercial retail enterprises and manufacturing enterprises have a relatively loose collaboration relationship, with relatively high operating risks. Although the quality of products produced by manufacturing companies that have abandoned the use of manufacturer brands is better, they cannot be compared with other large ones due to their small scale. Companies compete, and thus join forces with large retail companies, the two sides are mutually beneficial.

2. Retail commercial enterprises have their own production bases, that is, they invest in factories to produce products designed and developed by themselves. Its characteristics are: production enterprises and commercial enterprises are not trading relationships but cooperative relationships, have common interests, strong stability, low transaction costs, but require commercial enterprises to have considerable scale and certain economic strength.

Private label is a product brand created and operated by a commercial retail enterprise. In recent years, large-scale international commercial enterprises have generally adopted their own brand management strategies.

Before 2006, Watsons personal care products store ("Watsons") has not yet entered the second-tier cities in China, but the bird's nest essence beauty whitening mask, collagen hand cream, pink cotton pads and other products with the registered trademark of "Watsons" have It is famous, and its reputation in the second-tier market is no less than that of some well-known brands. The reason why Watson's private label products have attracted people's attention is closely related to their "innovative, high-quality, low-cost" market strategy. For example, in terms of price, the price of Watson's own products is 20% to 30% cheaper than similar products. With its own brand, the transformation from a terminal retailer to a direct product retailer, Watsons has been smoother and smoother along the way. In eight years, Watsons has developed more than 2,000 private label products. As of the end of 2008, its own-brand products accounted for 15% of the total in-store products, while private-brand sales accounted for 10% of total sales and market share of 34%.

China Resources Vanguard Private Label

Private label high gross margin

Wal-Mart and its many and many supermarkets jointly promote "Huiyi" food; "Carrefour" brand special pork, "China Vanguard" brand roll paper, "Bee Lotus" brand hand cream, more and more retailers Launched "Private Brand" strategy. What causes major retailers to become increasingly enthusiastic about developing their own products? Feng Jianjun, a domestic retailer's own brand expert, found that adding retailer's own brand goods in the store not only improves the reasonable coverage of the product line and product structure, but also increases the number of barcodes on the product. It also provides more products Trading opportunities, thereby improving business indicators such as total merchandise sales and customer unit prices. At the same time, private brands are still a secret weapon to check and balance brand owners. Once the private brands have established their own systems, a strong immunity can suppress the right to speak of front-line agency brand suppliers. More importantly, the introduction of private label products can increase the average gross profit margin of retailers and improve their operating income. The private brand's gross profit is higher than the supplier's brand, this is for sure. Instead, he admitted that "achieving high gross profit" was the driving force behind Watsons and other retailers' involvement in the development of private label products and the continuous development of more private label products. Luo Jingren explained: "Some private brands have the same gross margin as the supplier brand's ex-factory price, but because the private brand saves channel costs, logistics costs, and wholesaler and middleman costs, This part of the cost constitutes the price advantage of private label. "

Private label copy of hot products

How was an own product born? Interestingly, most of Watson's private label products are imitating hot products. In the Watsons private label development team, a group of people tracked and investigated the sales trends and customer needs of each branch, and then determined new private label products based on data such as product sales, customer response, and market analysis. Generally, Watsons will calculate the most popular agency brand products in the store that month. As long as the profit margin is in the interest, Watsons will select a set of foundries from a large number of manufacturers according to a set of strict internal product quality guidelines, and In 2 to 6 months, we copied our own products similar to the hot-selling agency products.

Promote new products with own brand

Watson's own products in 2009 will add more than 240 products. There are upgraded products with updated packaging or optimized formulas, as well as brand new products developed based on changes in consumer demand. When promoting new own products, Watsons generally adopts key recommendations from employees, new product price promotions, and new products to send star products And other methods to concentrate firepower for promotion. As the popularity of Watsons's own brand continues to increase and its sales performance continues to increase, the sales growth so far in 2009 has increased by 25% compared to last year. There is no doubt that private labels have become Watsons' "gold sign". There are risks in developing private labels. For example, Watsons, after all, does not have a production plant and R & D team, and develops its own brand strategy too quickly. It has to rely on OEM production support. In the long run, it is difficult to ensure the brand and quality of products in the past. Even if process control, results evaluation and information feedback are followed up The combination of these factors may cause great damage to the brand when a crisis occurs.