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The product development of the private trend fully depends on the matters of the product position, and the market concentration in the particular sphere. It is necessary to mention, that there are numerous factors, that influence the following development of the product, and it relates not only to private labels but to every if it is not only the production of prime necessity.
The Trends of the Development
The trends of the development, which are generally attributed to the labels, may be different, but in general, they are divided into three groups:
- Staying comparatively competent
It is not necessary to define these trends, but it should be stated, that the way, which the trademark will go depends on the following components:
- Presentation and price quotation
- Agreement to supply private label
- Design of packaging
- Delivery to customer
- Vends policy of the company
If at least one of these factors is not included in the policy or has not succeeded in the realization, there will not be a success in the further development, until corrected.
The companies and corporations aim to try as many mechanisms to grow as possible. But it is often rather difficult for a private label to gain new customers, as the central part of the market players have been already conquered the sector, and the retailers prefer dealing with the checked and reliable providers and manufacturers. This statement is about both small and huge private companies.
While there is a huge number of companies, that prefer focusing solely on their proprietary brands, many other companies have realized the immense potential incomes that may be gained from promoting the private brands. Despite the numerous difficulties of the initial advertising, if fixed in the market niche, it is featured by higher incomes.
Retailers’ attitude towards private labels is revealed by the fact that they aim to get the maximum profits, but they are reluctant to deal with innovative brands. Nevertheless, the rate of private labels in the supermarkets is 86%, and it is forecasted, that this rate will three to five percent increase in the following year. However, the weak points are evident in dealing with private labels. (Michman, 2008) These manufacturers are more subjected to threats if the national financial situation is not stable. It is closely connected with the fact, that private manufacturer rarely produces the whole spectrum of the goods, required for the production (packaging, some parts of special materials), and the link with the supportive manufacturer (if private too) may be lost during the crisis. That is why the retailers deal only with reliable manufacturers, who also may afford to reduce the wholesale price.
In the conclusion it is necessary to summarize, that the trends of private label development may be different, however, often dependent on the particular factors, that should be realized as perfectly, as possible. As for the retailers, they are reluctant to deal with the private manufacturers, until they become reliable and stable.
Michman, Ronald D., and Edward M. Mazze. Specialty Retailers: Marketing Triumphs and Blunders. Westport, CT: Quorum Books, 2008.