One of the hardest decisions facing a new startup is how to quickly broaden their product lineup in order to deepen market appeal, increase customer attachment by offering a wider range of products, and widen market opportunities – all on a tight startup budget. One way to do this is through using either white label or co-branded products to quickly expand the number of products offered. Both approaches allow you the potential to offer proven, customer-friendly products at a minimum cost to your business.
White Labelling vs Co-branding – Which is Right for Your Business?
Each option offers a wide range of both range of advantages and disadvantages unique to the approach that you choose. And which to choose can differ greatly based on the needs and goals of the individual business. Choose correctly, and your business could be on the fast-track to success. Choose poorly, and you can quickly squander both customer good-will and funds desperately need to make your business successful.
Let’s take a look at the advantages of each option, beginning with white label products.
Why re-invent the wheel?
White label products are proven products, with proven track records, that are manufactured by another company that packaged and sold under your company’s branding. The vendor who provides and packages the product for you has already done the product research to design, perfect, and market-test the product. This eliminates a huge cost for a start-up while also eliminating the possibility that you will sink time, money, and company resources in a product that will not sell.
Speed to market:
The biggest challenge to any startup is to hit the ground running and start generating revenue as soon as possible. Selling white label merchandise allows your company to quickly build positive customer relations – and a healthy bottom-line – while also working on the product or product line which you really want to build. Creating your own products takes time and money. Selling proven white label merchandise helps provide the funds and resources to build your own unique products further down the road.
Grow Customer Satisfaction by Offering Them the Products They Want:
Customers like complete product lines. For instance, if you make a firewall product, there is a good change customers will also want to purchase switches or other network gear from you simply because a single point-of-purchase can significantly streamline the purchasing process. In addition, customers are more confident in, and more willing to purchase, from companies that offer a full product line. Offering a single product or a handful of products is a sure way to force your customers to seek other vendors who offer a more complete product.
Focus on What’s Important to You:
White label products allow you to offer successful products that fall outside of your company’s primary area of expertise, while allowing you to focus your limited resources on products that fit your core competencies. Startups often fail because they overreach and offer products that they lack the expertise or knowledge base to successful develop or bring to market. Time, money and effort invested in the wrong product at the wrong time – particularly when facing off against competitors who are simply offering a better, more proven product – can quickly devastate a startup. White label products allow you to avoid this pitfall. In addition, white label products can also be a valuable research tool to help you determine what sort of products you should offer. While you shouldn’t waste resources re-inventing the wheel, there’s absolutely nothing wrong using the experience you gain from selling white label products to offer your customers an improved wheel.
For many startups and smaller companies, offering white label products is an ideal solution. Using white label products can new startups hit the ground running or existing companies explore a wide range of possible new income streams at greatly reduced expense and risk.
Co-branding offers another option for these companies by allowing businesses to pool expertise, brand awareness and customer loyalty to offer products that both businesses can benefit from. At is core, co-branding is simply the practice of two – or more – businesses lending their branding to a single, shared product.
This can be as simple as a one company simply licensing their name to another company to literally co-brand a product, or actively working jointly with a company, or even a competitor, to bring a shared common product or line of products to market.
Here are a few advantages of co-branding:
Consumers are instinctively drawn to product, company and brand names and logos that they trust and with which they have positive connections and memories. For instance, a startup may make a sturdy yet not particularly exciting product under their own name that will fly off the shelf if they can get a major brand to co-brand the product with them. This allows an already successful company to gain a toehold in a new product category while giving the startup the initial customer recognition it needs to successfully bring a product to market.
Synergy and improved market penetration:
Companies that make complementary products can use co-branding to promote their products to consumers as a full solution of products that work well together under a common branding umbrella. This boosts both consumer confidence, and the bottom line of the co-branding companies. This can in turn build positive consumer relations and increased market share in previously ignored or unexplored market segments.
Shared risk, shared reward, and building for the future:
Co-branding helps dilute the risk of bring new or untested product concepts to market for small companies and start-ups, while encouraging all parties to do their best to make the co-branded product or products successful. This shared risk and shared reward structure can not only build stronger companies and better products, but build stronger business relations between companies that can yield benefits for all parties well into the future.
It is vitally important that a young company build a good reputation with its customers and potential customers as quickly as possible. Co-branding can help, but it can be a double-edged sword – pick a good, solid, and trustworthy partner with a good reputation, work well with them, build a quality product with good customer support, and you will quickly build an equally good reputation in the marketplace. However, partner with the wrong company, or fail to keep up your end of the bargain or market a shoddy product, and your reputation will suffer. Business live or die on reputation, and you need to carefully consider the effect of any co-branding project on you reputation before proceeding with it.
Co-branding can be an ideal solution for the young startup or small company that is trying to break into the marketplace, explore new product areas, or simply get their name in front of consumers as quickly as possible.
However, it may not be the right solution for your company.
White Labelling vs Co-branding:
Deciding between white label products, or co-branding with an established company, can have far-reaching effects on your business. For this reason, you should carefully consider the advantages, and possible pitfalls, of both marketing models before choosing one, or neither of them for your business.
Contact us for more information on how to make the right branding decisions for your company.
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