In the modern world, people are increasingly concerned with maintaining a healthy lifestyle. As a result, there has been an increase in the availability of biologically active supplements which can improve the functioning of specific body systems and general health. With the rising demand for a healthy and active lifestyle, more and more manufacturers are entering the market.
In this scenario, to stand out from the competition and win over customers, it is necessary to implement marketing strategies correctly and proactively. When promoting dietary supplements, it is essential to showcase their beneficial properties to the public and inform them about the needs they can meet. Additionally, it is imperative to create an appealing brand image as part of the strategy in order to increase audience loyalty. In this context, it is essential to adopt innovative approaches to packaging, design, product information support and consumer communication.
Millmax has compiled this material for those who wish to establish a dietary supplement brand, but do not know where to start and what to look for. This article will provide information on how to effectively create and promote products in a competitive environment.
The concept
If you work in the food additives industry, you have likely pondered which business model to choose: private label or white label? Their selection depends on the goals and resources of your business. These are two distinct types, each with its own characteristics and differences.
A private label is a product that carries its own trademark, developed for a certain retail seller or distributor. That is why it is also referred to as a retailer’s own brand. A private label signifies that the retail seller creates and controls the product, imprinting their logo or name on the packaging. Such a brand is not tied to the manufacturer and is often exclusive to a particular chain of stores. For instance, it could be items produced by large retail chains and supermarkets under their own brand names. The control over the brand also belongs to the retail seller.
A white label is a product manufactured by a producer but sold under the name and trademark of a retail seller. The seller then applies their own trademark, hence it is also known as the seller’s own brand of the manufacture. Opting for a business under a white label, a vitamins manufacturer is able to offer products with different brands for various retail sellers, who then set their own prices and control the marketing strategy. The production of white label scheme, packaging of these products, and all final decisions are handled by the manufacturer itself, not the retail seller.
Most people associate starting a business with significant expenses. We agree that managing your own company requires substantial financial and human resources, time, and effort. However, you can alleviate some of the burdens by opting for a private label or white label.
Advantages and disadvantages of a private label in the contract manufacturing of food supplements
The advantages of a private label compared to a white label are:
- Exclusivity. The retailer has the ability to create unique products that are not available elsewhere. This helps not only to stand out among competitors, but also to reach a larger segment of the target audience. In addition, a private label allows sellers to control the quality of products and ensure they meet standards.
- Higher margins. By choosing a private label, retail chains can achieve higher levels of profit compared to conventional branded products. This is because private label products do not require the use of well-known brands.
- Quality control. Retailers can control the quality of production to ensure they adhere to standards. Moreover, the owner of a private brand has the flexibility to manage marketing strategies and product positioning in the market. Ultimately, this leads to adaptation of products to the requirements and preferences of a certain segment of the target audience.
Despite all the advantages of a private label, this business model has its cons:
- Limited market. Private-labelled products are only available in certain stores, which means they have a somewhat limited market, and therefore brand equity.
- Greater risk of failure. If private-labelled products are not popular with consumers, this could result in losses for the retail chain. Due to insufficient brand distribution, brand awareness decreases, making it difficult to attract new customers and retain existing ones.
Advantages and disadvantages of a white label in contract manufacturing of dietary supplements
Retailers need to realise the advantages and disadvantages of both private and white label to determine the best type of business model for their production. You have already become familiar with the advantages of a private label, hence Millmax will do its best to present you with more information:
- Cost reduction of marketing: Since retail networks can leverage the already established name of a vitamins manufacturer to attract customers, they significantly save on marketing expenses. This also allows them to focus directly on sales and scaling their business.
- Expansion of the product range becomes possible through rapid adaptation to the market and efforts to meet customer needs. Thus, a white label can offer a broader range of goods.
- Improvement in supply chain efficiency: retail networks do not face logistics and product supply complexities, as these are typically handled by the manufacturer.
Disadvantages of choosing a white label:
- Competition with other retail networks: when a manufacturer sells products to multiple different retail sellers, competition between them may arise. This also makes it challenging to distinguish your exclusive products in the market.
- Dependency on the manufacturer: retail networks may rely on the quality of work and reliability of the manufacturer since they do not have full control over the production process and cannot oversee the quality of the products. At times, this can negatively impact the retail network’s business.
- Risk of customer distrust due to lack of brand recognition: such a situation may complicate the promotion of products in the market and reduce demand for the goods.
When operating through a white label, as a buyer, you only choose how the label will look. The manufacturer is an expert in producing a particular product, they decide how the product will be manufactured and packaged. In the case of a white label, you lose exclusivity of the product. Of course, all of this may be altered, should you have a sufficient volume to offset these expenses.
Major points to consider when making a choice between a private and white label
Upon making a choice between private label and white label in contract manufacturing of dietary supplements, it is necessary to consider various factors, including the company’s strategic goals, budget, market conditions, and consumer requirements.
- Marketing strategy and market positioning. If a retail network wishes to control marketing strategies and be a major player in the market, then choosing a private label is advisable. It can provide unique strategies and significantly enhance the company’s competitiveness. If the main goal of the business is cost reduction and rapid introduction of new products, then a white label may be the better option. It is a more efficient means for business expansion.
- Production volumes and product specifications. If your company aims for large production volumes, then understanding the importance of efficiency and low costs is crucial. In such a case, choosing a white label is necessary. On the other hand, for those aiming for exclusivity and high quality, considering a private label is a must.
- Expansion of product range strategy. If there is a desire to quickly increase the range of products, choosing a white label is a go-to. It allows for faster expansion, while providing lower costs. If there is a desire to build long-term relationships with the audience, it is advisable to opt for a private label.
In addition to the criteria mentioned above, it is recommended to pay attention to the level of control and flexibility, as well as the level of responsibility. Opting for a white label can provide broader and more economical opportunities for adaptation in the dietary supplement market. A white label also reduces the risk of lower recognition, which directly affects customer trust. Private label facilitates greater control over the production process, product quality, and marketing strategy. For some companies this is of paramount importance, considering their desire to maintain control over their brand. With a private label, management responsibility also increases, heightening the risk of customer distrust in case of possible quality mishaps.
Conclusion
Once you know the difference between white label and private label, you ought to recognise that the vitamins manufacturer of each type of business is different. They are not all the same. Therefore, a thorough familiarisation with the partner should be engaged in choosing between private label and white label in contract manufacturing of supplements. Study reviews, examine ratings, and be sure to communicate with the company representative before you start working with them.
Both approaches have their advantages and disadvantages, therefore the successful use of each of them depends not only on the correct analysis of market conditions and consumer needs, but also on your desire to build a popular brand in the market, making every effort to do so.
