You've probably been to a supermarket, and you find a product that was given a brand similar with store name. For example, when you visit Wallmart, and finds a bag of sugar branded Wallmart. Yes, that's called a private label.
Private Label or Home Brand is manufactured by a supplier of goods designated by the retailer for the retailer. In this case, brands, criteria, size, packaging design, even the price is determined by the retailer. The advantages of private label is lower production costs than the goods that have been branded, because there are no research cost, promotion cost, or any other costs. The low production costs result in private label goods can be sold at much lower prices than the competitor's price.
Private label has a very strategic part in the retail business because some of the following benefits:
1. Give more choice to consumers, especially for consumers who prefer the functionality of the product rather than brand.
2. Providing value for money is better for consumers because private label produced at low cost, so it can be sold at a cheaper price than the products that have been branded.
3. In market competition, private label can not be matched head to head with branded goods so as to provide good results in terms of margins.
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