National Brands vs. Private Labels Term Paper Example | Topics and Well Written Essays - 250 words

National Brands vs. Private Labels - Term Paper Example Private brands, however, have a great economic value for both the retailer and the customer. They do create customer loyalty that eventually contributes to referrals and effective word of mouth to other customers and thus higher sales for the retailer. In addition, private labels give retailers sole ownership of the product. The retailer will come up with innovative ideas related to pricing and quantity and thus suiting the preferences of the customer (Horowitz, 2000). The main disadvantage of nation-manufacturer brand emanates from the high cost that may discourage some consumers and limit profitability while low unit profit margin that may compromise quality to consumers and motivation among retailers is the major disadvantage of private-label brands. It is quite difficult to determine whether the own-labeled brands are equal in pricing and quantity to national labeled brands. Hence, the customers may be exploited without their knowledge. Unlike the store brands, national brands spend exorbitant amounts of resources in advertising across a wider region and the burden of the cost falls on the customer because of the expenses incurred (Aaker, 1991; Horowitz,