Seize the Opportunity Before it Seizes You: A Brand Manufacturer’s Dilemma and Countervailing Strategy for Private Label

Abstract

Looking at a comparison across markets, there is a slow, but steady continuation of private label progress, which is actually the result of more retailers deploying private label products in a growing number of categories. Private label retailers now see it as a strategic weapon against brand manufacturer to increase store profitability, Retailers without private label tries to strengthen their position against private label but looking the private label from brand manufacturer’s perspective, determinants and strategic choices are even more complex than that of a retailer. In a typical scenario a brand manufacturer may be serving to a retailer as a customer of his own brand on shelf of retailer, Retailer as a competitor where the same shelf is shared and competed with private label of retailer, manufacturer as vendor of retailer i.e. manufacturing private label for retailer, manufacturer selling his brand though distribution channel other than retail stores and manufacturer producing private label for more than one retailer.

The articles discuss various cases of why a brand manufacturer goes for manufacturing private label in spite of having his own brand in competition? In what circumstances a brand manufacturer should concentrate on manufacturing his own brand or both private label and his brand? Or as an alternative he should purely dedicate himself in manufacturing private label and stop manufacturing his own brands?

Keywords: private label, brand manufacturer, retail, outsourcing