A growing trend in the retail world is the use of private label brands (CTMs), also known as Private Label. This approach to sales opens up new opportunities for retailers and manufacturers alike. In this article we will look at what STMs are, how they affect the country’s economy, the pros and cons for local and foreign manufacturers, and examples of successful foreign STMs.
Creation of own trademarks
There are several strategies used to create CTMs:
Dumping: Products are produced to meet current market demands and offered at lower prices. This method is the most popular and easy way to market own brands.
Competitor substitution: Companies using this strategy try to displace market leaders by offering alternative goods and services of their own production. This method is particularly effective in segments where consumers are willing to buy similar products. Most often this is the FMCG (FMCG) segment: food, beverages, household chemicals, hygiene products.
Brand extension: This approach involves cooperation between the core brand and the CTM. The core brand strengthens and promotes the CTM, which in turn becomes a full-fledged brand, extending beyond the original retail network.
One of the most striking examples of successful implementation of own brands is the chain of stores “Korzinka”. According to the information received at the end of 2022, they introduced more than 300 new products in their assortment under the brands “365 kun” and “Iz Korzinka”, turning into a key player in the STM market in the country.
Why you need your own brands
Owned brands provide a number of advantages for owners, producers and consumers:
For owners:
– Standing out from competitors: Owned brands allow owners to differentiate themselves in the marketplace by creating exclusive products.
– Price management and increased loyalty: Brand owners can regulate pricing and increase customer loyalty by offering products at more affordable prices.
– Increased sales and profits: STMs typically have higher margins, which contributes to higher profits and increased sales.
For manufacturers:
Increased sales and reduced costs: Working with STMs allows suppliers to increase sales and reduce production costs.
Growth Opportunity: Working with STM gives manufacturers the opportunity to increase production and invest in business development.
For consumers:
Price: STMs offer quality goods at more affordable prices, meeting the needs of customers with different income levels.
Wide selection of goods: STMs cover almost all categories of goods, including food, clothing, household chemicals, as well as secondary needs such as appliances and electronics.
It is important to note that STMs provide a unique opportunity to enter a niche market with minimal financial risk. In case of successful business under own brand, there is a possibility of further expansion and opening of own production. Thus, own brands represent a two-way bargain for both owners and consumers, providing a source of sustainable growth and innovation in the retail industry.
Disadvantages of proprietary brands
Like any business, STM has its disadvantages and risks. For example, for owners, there may be a risk of loss of reputation if the quality of products does not meet consumer expectations. For manufacturers, a strong decrease in product prices can affect profits. For consumers, buying goods at low prices can be associated with the risk of purchasing a low quality product.
Also, one of the disadvantages of STM for the country’s economy is the possible loss of currency when dealing with foreign producers. However, exporting STM products can compensate for this disadvantage by attracting foreign investment and foreign exchange to the country. For example, in 2022, the bi1 chain of stores started exporting STM products to Tajikistan. 340 goods of Uzbek producers can already be purchased in Auchan and bi1 stores.
Many store chains are actively using the strategy of creating their own trademarks, attracting attention to their products and strengthening their position in the market. Having a wide potential and their own shelves, these chains can place their own brands anywhere and in any quantity. Thanks to a deep understanding of their customers’ preferences and where products sell well, the chains know exactly which products to offer under their own brands.
For example, the Uzum Market store chain offers its own brand of goods under the name Oila tanlovi, the Makro supermarket chain offers the M brand, and the Korzinka supermarket chain offers 365 kun and Iz Korzinka. Such initiatives allow store chains to create a unique assortment of goods, and consumers to enjoy the variety and quality of goods under their own trademark.
In general, own brands have become an integral part of the retail industry, providing benefits for both entrepreneurs and consumers, and contributing to the overall development of the business. Our agency actively cooperates with many owners of own brands, providing them with professional services to create unique product packaging design. Our clients include such well-known brands as Minix & Afshon, Zenit, Crafers, and many others who trust us to design their product packaging.