Pillars supporting private labels

Bringing out Private Labels (PL) in stores alone will not help retailers drive sales. Positioning and pricing are the two key pillars for the success of a PL. Read ahead

The power of private labels is being explored by retailers all over the world. In India, though it is relatively a new concept, it is a rage amongst retailers and almost all of the retail biggies to have their own private labels. Retailers who do not wish to be at the mercy of big brand names and want to fill in the gap to keep their shelves packed have taken the route to introduce their own labels.


Though the concept of owning and starting a private label may seem very enticing to retailers, it is not that easy to establish a brand name. The strategies to market and position your brand name in comparison to the already established names is a cumbersome task. Taking the right pathway can simplify the journey for a retailer. Pricing your product is the first consideration that needs to be attended followed by positioning of your brand and giving it a final shape. Here is how you can tackle these vital issues. 


Pricing strategies

Price competition is one of the primary reasons for the existence of Private Labels. Private labels are often positioned as low cost alternatives. They are usually initiated to attain higher gross margins as compared to branded products. The margins with private labels are far higher as compared to those of a branded product. Private labels in food and groceries carry margins of 25-35, while private labels in apparel and accessories offer more than 40 per cent margins. On the basis of the margins, a product has, retailers should price their merchandise on one of the following prices:


Parallel prices: Parallel price as the name suggests is the price equivalent to that of other branded products. This is done so as to change people’s perception that private labels are of lower quality as compared to branded counterparts.


Copycat prices: A copy cat price which is one of the most widely used methodologies of pricing for private labels is the price lower than that of branded products. As margins are high, cutting some costs here and there enables retailers to give a lower price.


Premium prices: Premium prices are the prices that go higher than the branded products. This is a strategy that helps create an up-market image in the minds of the people for the private label. This also adds value to the product and brand. 


Brand positioning

Pricing is one of the first elements that demands consideration. Positioning your brand name follows next. Branded products come with an assurance of quality, which is an extremely significant facet that needs to be considered by the retailer for their own labels.  Compromising on quality defines the end of your brand. Efficient customer service, variety available, and value added services are a few things that should be incorporated in the private label and the same should be marketed to customers.


End note

So if you are considering establishing your own private label, you should think about doing so on the lines of effective pricing and positioning. Put these pillars into use and success will soon follow!

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