Store brand

From Academic Kids

Store brands are brands which are specific to a retail store. The retailer either manufactures goods under its own label or rebrands private label goods. Store brand goods are generally cheaper than national brand goods because the retailer can optimise the production to suit consumer demand and reduce advertising costs. Goods sold under a store brand are subject to the same regulatory oversight as goods sold under a national brand. Store brands are perceived as major threats to national brands by manufacturers and have helped shift power to the retailer in the industry.

Store brands attract consumers who are sensitive to price, or in categories where quality is not a deciding factor. Taste tests conducted typically show that significant proportions of consumers cannot differentiate between a store-branded cola and market leaders such as Coca-Cola and Pepsi; thus, colas are a popular product for store branding.

In some retail sectors, store brands account for 40 to 50 percent of sales. Store branding is a mature industry; consequently, some store brands have been able to position themselves as premium brands. Sometimes store-branded goods mimic the shape, packaging, and labeling of national brands, or get premium display treatment from retailers. (For example, "Dr. Thunder" and "Mountain Lightning" are the names of the Sam's Choice store brand equivilents of Dr Pepper and Mountain Dew, respectively.) These practices are often controversial.

Although the store brand market is poised for growth, retailers realise that it is premium national brands which cause the consumer to select a store. Once the consumer arrives to buy a national brand, the retailer typically makes more profit by selling a store brand, which has higher margins. This has lead to a spurt in the academic and trade literature on the subject of positioning the store brand vis-a-vis the national brand.

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