The business arena continues to get more competitive by the day. As a result, business organizations seek ways of using existing strategies to better their performance while at the same time devising new mechanisms to enhance their profitability. The emergence of private label brands is a case in point. Their use as a marketing strategy has proliferated among retail organizations across the world. The success of these private label brands has ignited widespread debates on whether national brand manufacturers should supply retailers with goods for private label branding (Nenycz-Thiel, Sharp, Dawes, & Romaniuk, 2010).
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The primary purpose of any business venture is to generate profits. Consequently, national brand manufacturers have every right to supply merchandise to retailers for private label branding. According to Kotler & Keller (2012), companies that thrive in the contemporary business arena employ multichannel marketing. Philips is an outstanding example of a company that has done exceptionally well as a result of its multichannel marketing strategy (Kotler & Keller, 2012). In addition, Nenycz-Thiel et al. (2010) note that a large number of national brand manufacturers argue that the supply of goods to retailers for private label branding can consolidate their ties with retailers. Therefore, despite the possibility of marketing channel conflicts in multichannel marketing as pointed out by Kotler & Keller (2012), the benefits of supplying goods for private label branding outweigh the costs. National brand manufacturers should thus go ahead and supply retailers with goods for private label branding.
In the international marketplace, the situation is not different. The proliferation of private label goods has known no bounds in the recent past. Every part of the world is aware of what private label brands are. However, it is important to note that private labels, like national brands encounter a myriad of challenges on the international scene. Nonetheless, several success stories have proved that private label brands are capable of doing well on the international market place. For instance, Loblaw’s private label brand, President’s Choice has done so well that the retailer currently licenses it to retailers in other countries (Kotler & Keller, 2012).
The idea of private label brands in the international marketplace has several different facets. Due to globalization, manufacturers and retailers from all over the world have extended their operations to other countries. As a result, a multinational manufacturing organization can engage in the production of goods for private label branding in a foreign country. Alternatively, a multinational retailer can introduce a private label brand that is thriving in its home country into a foreign market. Again, Loblaw’s introduction of its President’s Choice line of products into the American market after its unparalleled performance in Canada is a case in point (Kotler & Keller, 2012). In a different perspective, a local retailer can establish an agreement with a foreign manufacturer to supply it with goods for private label branding.
Several pertinent issues emerge when considering private label branding and the international market. For instance, if a local manufacturer produces goods for a foreign retailer to sell under a private label, the idea of brand cannibalization ceases to be of concern to the manufacturer (Kotler & Keller, 2012). Similarly, if a local retailer contracts a foreign manufacturer to supply goods for private label branding, the conflict between the retailer and the local national brand manufacturer takes a competitive dimension. In the case of a multinational manufacturer or retailer entering a foreign market, the private label brand has to compete with national brands and other private label brands to establish a market share. For instance, it took Tesco over 20 years to prepare for the American market (Kotler & Keller, 2012). The retailer had to conduct extensive market research to understand the tastes and preferences of Americans in order to make its merchandise appealing to them. Therefore, for a private label brand to succeed in the international market, a lot of groundwork has to precede its introduction in order to understand the gaps left by national brands.
Kotler, P., & Keller, K. (2012). Marketing management. Upper Saddle River, New Jersey, NJ: Pearson Prentice Hall.
Nenycz-Thiel, M., Sharp, B., Dawes, J., & Romaniuk, J. (2010). Competition for memory retrieval between private label and national brands. Journal of Business Research, 63(11), 1142-1147.
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