Bring in the Customers: The Benefits of Private Label Packaging

Every business knows product design is the key to a successful product. Attractive packaging is equally important as the quality of the product. Retailers around the world spend millions on testing exciting and colorful packaging for their products. Whether its cosmetics, grocery, or medical, consumers make split decisions based on the appearance of products.

With crowded markets and growing competition, retailers need a specific edge. Engaging product packaging gives your company a real advantage. But spending time designing and testing several design variations can be costly and time-consuming, especially against the competition of larger name brands or franchise businesses.

This is why it is a smart choice for growing businesses. It saves companies’ time and money by letting another business design, manage, and distribute their products under the original company’s brand.

Business Dictionary defines a private label is a “brand owned not by a manufacturer or producer but by a retailer or supplier who gets its goods made by a contract manufacturer under its own label. Also called private brand.”

Not only does this save resources, it can draw and retain more customers. According to Package Design Magazine, “Annual sales of private-label products have risen by 40% in supermarkets and by 96% in drug chains, reaching more than $100 billion in 2010.”

This type of packaging has another advantage: consumers are quickly learning private labels are the same quality as larger national brands. Unlike name brands, these products don’t have to pour in huge dollars for advertising. The product can be sold at a more attractive price point without sacrificing quality.

Major stores like Trader Joe’s and Whole Foods are delivering more private label products. A surprising development is that consumers are becoming loyal brand followers.

The Private Label Manufactures Association, PLMA, is a non-profit group that organizes the industry’s largest annual private label trade shows in Chicago, Amsterdam, and Shanghai. A 2011 study for PLMA found that eight out of 10 consumers now rate private label as either “equal to” or “better than” national brands.

Some of the reasons for this growing acceptance are the Great Recession and the subsequent recovery. Millions of consumers became more price conscious. For some, this was the first time they ever purchased a private label brand. After years of regular use, shoppers have incorporated these brands into their grocery or cosmetic purchasing routine.

There are many companies providing services for a range of industries. Cosmetics businesses are a great candidate for this type of packaging. A private label cosmetics manufacturer can create your line in small or large quantities depending on your businesses needs. You have the freedom to choose the shades and customize the packaging. This is a smart choice for small beauty salons and boutiques.

The food industry is another big fan. According to a Nielsen report, “Private label food brands are a $90 billion business accounting for 17.4 percent of retail food sales in the U.S.” These food companies don’t have to shoulder the huge costs of advertising, so they can price their product at a lower price while still retaining a better profit margin.

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