Maria Jose Guerrero
Private Label Brands, also known as White Label, continue to win market share. According to data from the Private Label Manufacturers Association, in the first half of 2024 they reached a 38.6% market share in Europe, an increase of 0.5% compared to the second half of 2023. Today, the quest to find products with the best quality-price ratio prevails over other factors.
Therefore, understanding how private label or white label brands set prices is essential to stay competitive. Fortunately, more and more advanced tools such as Minderest’s Competitive Environment allow you to analyze and compare products of different brands with similar characteristics to optimize pricing strategies and thus improve market positioning. You can compare your brand against recognized brands or other retailers’ store brands.
Before pricing private label or white label products, you must consider several factors if you aim to increase sales or maintain or improve your profit margin. Read on to find out more.
Advantages of white label vs national brands
The reasons why more and more retailers offer private labels include:
- Lower costs: Cheaper to produce and procure than premium brands.
- Higher profit margin: Lower production costs make higher profits possible.
- Price monitoring: The flexibility to set prices without the restrictions imposed by manufacturers’ minimum advertised price policies (MAP) (a widespread practice in the USA).
- Customer loyalty: Opportunity to offer exclusive products that boost loyalty to the store.
- Rapid response to the market: Ability to adapt and change products quickly in response to market trends.
- Easier to promote: There is less need for investment in advertising and promotion compared to recognized brands.
As you can see, the advantages offered by private label or store brands are numerous and significant.
Pricing strategies for white label products
Pricing for private label or white label products is critical to staying competitive in a market increasingly dominated by the quest to find the best value for money. It is vital to consider several steps to ensure your pricing strategy is effective.
Steps toward consistent pricing for store brand products
- Identify the products and brands the store brands or private label competes with or replaces. It is crucial to clearly define the private label brand in question’s competitors - whether it is other store brands or recognized brands. Retailer brands or private label brands are chosen via the substitution effect, i.e. they meet the same need for a lower price.
- Private-label brand prices must perfectly align with the retailer’s strategic objectives.
- A private label brand should not be more expensive than a recognized brand. If it were, it would impact the consumers’ choices as they would no longer perceive the brand as good value for money. You must also maintain a certain distance from the manufacturer’s product or the recognized brand it replaces. If the prices of the two brands are very close or your brand does not result in big savings, the consumer will likely choose the recognized brand as they perceive it as being more trusted and of higher quality.
This is why it is essential to use advanced price analytics tools such as Minderest's Competitive Environment, which allows you to compare products from different brands with similar characteristics to identify their competitive positioning. With a consistent and well-defined pricing strategy, you can leverage the competitive advantages of private label brands and continue to increase your market share.
Find out how Minderest can take your business to the next level.
Contact our pricing experts to see the platform in action.
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