Own Label or Branded Products in the Janitorial Industry

// May 16th, 2010 // Uncategorized

Cleaning and hygiene; one of those expenses that generates no profit, no one wants to pay and everyone thinks can be reduced. No big surprise then when the corporate belt tightening comes knocking at the facilities Managers door. Reducing fixed costs has been top on the agenda for the last few years, so what’s left to cut? Increasingly the temptation is to look for cheaper products, leaving the sanctuary and comfort of the established national brands to flaunt with the darker, murkier world of smaller own label products; many of whom promise the same cleaning power as the major brands but at a fraction of the cost.

Good thinking or false economy? The question will be on the minds of many a Facilities Manager in the coming summer months. Is it possible to achieve the same results, but reduce costs; the national brands spend thousands on building brand image which is inevitably added to the price of the product, but is there a difference in quality between the own labels and national brands?

Ask any marketing manager about their brand and they’ll all tell you the same thing, the brand is more than just the product, logos, brand names and imagery; the brand reflects the personality and values of the company. That is to say there is an intangible element added to a product by the addition of the brand which reflects in the mind of the customer what the company stands for. Strong brands such as Diversey, Deb, Ecolab and Jangro create a preconception in the mind of the consumer reflected in the quality, value and service they provide. Gary Fage a Jangro Director and member of the Jangro marketing team states, “our brand acts as a guarantee to the customer; they can be assured that if the product contains the Jangro label they are guaranteed high quality and excellent value; but that’s only half the story, a strong brand allows for extra benefits such as guaranteed product consistency, a unified health and safety system and a commitment to innovation”.

The motives behind own label are less clear cut. In some cases own label is used as a method of promoting the name of the distributor, but all too often own label is being used as a method of increasing margin and reducing competition.  Imagine the scenario, a manufacturer is looking to expand sales in a area where they already have a main distributer, opening a second distributor selling the same product would cause competition, disagreement and lower margins, so instead the manufacturer suggests one of the distributors takes an own branded version of the same product. Worse still, the distributer considers own branding a product in order to sell the product at an inflated margin,  as the original manufacturer is not shown the customer has no form of comparison and none of us have the biological testing equipment to test a disinfectant!

Own brand can be good value, genuine and sensible economy, but customers have no way of differentiating between the chemical made in the distributors home garage simply packed with harmful acids,  or  the products containing high quality surfactants made by respectable reputable manufacturers.

National brands offer security and it could be argued better value; National brands invest more in research and development, use automation to reduce manufacturing costs and benefit from cheaper costs associated with larger production runs. There is also something to be said for the brand leaders, they became brand leaders because their product was the best in the category, how can everyone be wrong?

I have no doubt that many managers will tread the own label route as an easy option to short term cost cutting.  Some will be happy as the distributors are honourable and the products acceptable for purpose, however equally there will be those who find the long term costs far higher. There are no steadfast rules, no way of telling cheap chemical form real quality, but if you want to try own label think carefully about the distributor you are about to purchase from, do they share your values of quality, value and service or are they out to make a fast buck?

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