White Labeling

Introduction

White labeling is branding on products (or services) belonging to an organisation that did not produce the goods or services. White labeling is used in a wide variety of industries including food, technology and financial products.


The diagram below illustrates how white labeling is used by firms

White labeling Diagram

Why Use White Labeling

Sometimes firms feel that they can market goods and services effectively but it may be better for another firm to produce the goods for them. There a variety of reasons why a firm will ask others to produce goods for them including:

Examples Of White Labeling Within The Food Industry

Many supermarkets offer own brand label products. There are two ways of doing this.

Examples Of White labeling Within The Financial Industry

Financial products are offered by many organisations some of these organisations will use white labeling because they do not have the infrastructure required to offer financial products. For example small banks will ask large banks to handle their credit card operations as this is cheaper then dealing with it themselves. You may also get new financial organisations such as supermarkets who want to offer financial products using white labeling, because they do not have the financial licence (or other regulation) required by law to offer financial services.

Advantages Of White Labeling

Disadvantages Of White Labeling

Disadvantages Of White Labeling

Conclusion

White Labeling involves two firms (the firm producing the product and the firm labelling it with their branding), both firms will need to consider carefully whether they would like to enter into a white labeling contract. White Labeling allows firms to enter new markets but each firm is also taking a risk because it is relying on an external firm. The risks will need to be managed through detailed research prior to contract negotiations, safeguards in the white labeling contract and periodic checks during the contract.

 

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