National Branding vs Private Label Branding - Essay Example

Usually, it is hard to know, without the aid of chemical analysis or other forms of tests, whether private brands match national brands. Uncertainty may occur due to many reasons. For example, a bread company produces many private-label breads. This however does not mean that private brands are of the same quality as the name (national) brand. The bread company may differ in its formula when producing private brands, and we should also consider that the private brands may not be as fresh as the national brands (Kis 10).

Similarly, we can also look at the case of say the largest brewer of beer in your region under its own national label; can also be among the biggest supplier of private-label brand of beer. Many private-label brands of wines and spirits as you have witnessed are produced by well-known national-brand companies. Consumers are usually willing to pay more for national brands, because they are confident in their quality. This way they evade the risk of purchasing a low-quality product, which is usually a private label brand.

Hence, if they can be convinced to try out cheaper brands and find out that their quality is similar to the national brand they are accustomed to, they may switch (Lincoln 23). In a Gallup Poll, it was discovered that about 80% of consumers who tried a product with a private-brand label like a store brand, instantly became regular buyers. Store-brand customers are typically well-informed people, who pay attention to the labels. The Gallup Poll also showed that many consumers make an effort to study the labels and prices.

The Poll indicated that 40% of shoppers are selective: this means that they compare products on different dimensions considering the quality, price and special offers; therefore they do not just choose the national brand. Most national-brand products are known to be of a superior quality; therefore, they are usually sold for significantly higher prices than private labels. In June 1984, the Private Label Manufacturing Association conducted an independent research where they compiled a "Market Basket List" for 17 staple items.

Private labels’ total cost was found to be lower compared to national brands. It was found that private-label shoppers generally pay less as compared to national brand shoppers. Private-label strength is highly susceptible to economic conditions and will vary depending is this factor. This means that private-label market shares goes up when the economic situation is not good and down when the economy is good (Mennen 23). The main reason for the existence of brand names is because consumers usually need to be sure of quality when they lack the time, opportunity, or ability to examine other options.

Brand names simplify the selection process, since you will find that the products are cluttered. A survey by DDB Needham conducted in 1994 indicates that 60% of consumers prefer factors pertaining to national brands, for example, security, value and comfort, as opposed to private label brands. National brand-name goods have better competitive advantage over private labels, due to their solid foundation. They have a running start. The strongest national brands have been in existence for decades and have consistent quality.

National brands have value for retailers, which mean that retailers must have them, since consumers expect to find them widely distributed. If consumers fail to find them, they are