Tocompare the competing national and private brands I visited Company on Saturday 08-04-2017 at 2:00pm.The idea was to compare the various private label and nationalcleaning supplies brands that are offered to the customers by thecompany. The private label was Maxim and the national brand was Surfcleaning detergents. The comparison of the brands concerned theprices quality and the trend of the products. I also gatheredinformation from a procurement officer from Company who shedmore light on the private and national brands. Pros and cons ofNational Brands and Private Labels also emerged. Although theNational brands have the upper hand in the market as compared to theprivate label, the private label is slowly catching up and after sometime could customers’ preferences. In this paper,I will highlight anational brand and a private label brand, compare two competingbrands and then discuss the idea of national brands and private labelbrands.
Inthe store, there were both surf brands and maxim brands of cleaningsupplies that were put side by side on the shelves. The products weredifferent in that the store products portrayed a difference in thepackaging. The private brand was more attractive to the eyes of thecustomers as compared to the packaging of the national brands thatseemed to be packed in old-fashioned containers. The products wereequal sized, were in the same measurement, and were both of highstandards. A similar company using similar materials manufactured theproducts, and therefore the products were of equal quality. Theproducts were from a local company that produced both the private andthe national brand.
Incomparing the prices of the maxim and the surf brands, the prices ofthe surf brands were higher. Although the maxim retailed at slightlylower prices, it does not mean they were of low quality as the pricedifference reflected the promotional cost of the product wherenational products exercise aggressive advertisement resulting to thehigh price of the product (Cabral, 2017). The prices have greatimpacts on the profit potential n that, the high prices of thenational products reflects the high cost of promoting the products tobring it to the market. This means that the profit of the nationalbrand will be lower. On the other hand, the lower price in theprivate label represents the minimal budget allocated to advertisethe product. This result to a higher profit since there are fewerexpenses of production and marketing the product
Ina conversation with a procurement officer in the company, Iunderstood that the store brands (maxim) are gaining a lot ofpopularity in the advantage of the national products. The companiesin trying to end the perspective that store brands are of inferiorquality to the national brands, they contract the manufacturers whoalso manufacture the national brands. Although this was the case, theofficer was honest to say that in other categories of products wherereliability and trust were highly valuable the private label was notperforming as well as the national brands were doing.
Theofficer also was quick to remind me that the progress that the storebrand is experiencing is due to the willingness of the private storesto venture into something new. In addition, I was informed that thetrend of stocking unique store brand that could not be gotten in thecompetitors` store was an idea that they would implement to attractmore customers. Both the private label and the national productstarget similar customers. There is no difference in the class ofcustomers targeted by the two brands.
Privatelabel has a significant advantage in that it is a unique product ofthe store. They are marketed as the products of the store. Privatelabel also attracts more profits as the cost of producing andpromoting the product is controlled by the store hence becoming lowerthan the national products. The main drawback that the private labelfaces is the perception that the products are generic and thereforeof low quality[ CITATION Har10 l 1033 ].This lowers the sales of the private label. On the other hand,national brands have wide recognition. The products also enjoy anationwide distribution as compared to the private labelwhich may not enjoy the similar advantage. The greatest disadvantageassociated with the national brands is high prices. Sometimes theproducts are sold at breakeven meaning no profit is made. This mayeventually lead the product out of the market.
Inconclusion, the national brands have the upper hand in the market ascompared to the private label although the private label is slowlycatching up and will after some time be the most preferred by thecustomers. National brands and private label compete both regardingprice and quality. This competition affects the product consumptionby the client. The national products enjoy an upper hand when itcomes to the perspective of the quality. However, the private labelenjoys the low price advantage thereby attracting customers andmaximizing profit at the end.
Cabral, L. M. (2017). Introduction to industrial organization. MIT Press.
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