In a global market, why would a company choose to go generic and let distributors do the packaging and branding rather than doing their own packaging and branding?Specifically, what is the deal...

In a global market, why would a company choose to go generic and let distributors do the packaging and branding rather than doing their own packaging and branding?

Specifically, what is the deal with this pro-Vitamin mineral lipstick that is being sold and packaged by multiple distributors?

http://pura-bellezza.com/lips/natural-mineral-lipstick/

http://burstbeauty.com/cart/lipstick.html

And this one is an Australian distributor http://www.hafmineralmakeup.com.au/collections/mineral-lipstick

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pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

There are at least three reasons why this might be the case.

First, if a company does not have a strong brand to begin with, it gains little by insisting on doing its own packaging and branding.  It is unlikely that a big name cosmetics company would choose this approach.

Second, by going generic it might attract more distributors.  The distributors can then differentiate themselves from the competition by doing their own packaging and branding.  If the company were to sell the cosmetics under their own label, the various distributors would not be able to do this.  They would be selling identical products and would only be able to compete on price, not on other things like packaging and image.

Finally, it is likely that consumers in different countries respond to different sorts of marketing approaches.  Therefore, it makes sense to allow the local companies to decide how to market the cosmetics. This is especially true for a smaller company that lacks the resources to do market research and to create different marketing campaigns for various countries.

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