Even if you don’t intend to add private label products to your product mix today, pay attention to what competitors are doing and how they position private label against your manufacturer brands.

As our lead article in this issue points out, private label really took off in consumer packaged goods when the industry consolidated. As retailers created national footprints, they gained the scale to effectively build out private label programs.
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And it certainly requires a certain amount of scale to support the investment into private label – to source, develop and market effectively while not damaging your current lines.
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In distribution channels, it’s important to note that it’s not just the national chains that are building private label brands. Marketing groups in many sectors have found a sweet spot to meet customer needs and offer smaller distributors the opportunity to tap into these opportunities.
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The book discussed in our article bucks conventional wisdom that the role of private label is only to offer a low-cost” alternative to branded and premium-positioned products. In fact, the authors argue that low-cost private label strategies typically aren’t as successful or as profitable as well-developed brands created and priced to complement manufacturer brands.
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The best private-label strategies are based on differentiating from manufacturer brands, the authors found.
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Costco is worth studying in how it has developed high-quality private label brands in select product areas. That company does a great job with attractive price points for high-quality private label brands. But it also sells select premium brand names. Their success is in how focused they are in identifying and meeting customer needs, and then developing those with the most potential.