Referring to products as private label (PLP) or private brand is dumb.
There is nothing private about this decision-making process. To the contrary, users of this marketing tool are trying to make one of the following points as publicly as possible:
With the solid supply base we have in the heavy-duty market – with at least three national branders competing in each product segment – I frankly don’t see the need for the increasing number of alternate brands.
Several recent studies conclude that 50 percent of private brands are net losers from a distributor profitability perspective even though they have higher margins built into their lower price.
The difference between the private label success of Wal-Mart and Willie’s World of Truck Parts is supply chain management. The distributor or retailer needs to recognize that successful PLPs exist as a pure demand response – not a product push device – that is integrated into their businesses’ own brand.
President’s Choice cola for many shoppers is identical to Coke and it is supported by an unbelievably responsive supply chain. It is cheap to buy and profitable to make and distribute – but no one ever talks about how much better it tastes.
Differentiation is the most important thing a brand can deliver. Academics have shown that differentiation is a leading-edge indicator of future profitability and market share. As pure imitators, PLPs are a waste of inventory investment and a diffusion of focused marketing investment.
