Black mark

economic-dictionary

The black mark refers to the product that a company markets under its name, of recognized prestige. However, the item was manufactured by a third party.

That is, a black mark is produced by the XZ company, but is sold under the name of another firm, for example, AXS.

You have to know how to differentiate between a black mark and a white mark. In the latter case, a distributor offers its own product line.

Black marks represent an outsourcing of the manufacture of certain merchandise by well-known brands in their sector. More and more cases are becoming known, especially in the food industry or in cars.

Why do companies turn to a black mark?

There are many reasons why companies may turn to black marks, such as the following:

  • Savings: Whenever the outsourcing of a part of the process is sought, the aim is to save costs and expand profit margins for the marketing company.
  • Brand perception by the consumer: When a consumer buys a certain well-known brand it is because they trust it and its positioning is very powerful. The sales volume of the product will be higher if it bears the label of a recognized leading firm in the market.

Consequences of black marks

It is difficult for end consumers to identify the origin of the products they are consuming. In many cases, it is not clear on the labels and packaging whether the distributor brand is the manufacturer or not. For example, European regulations do not oblige you to say the country of origin, only if it is manufactured within or outside the European Union. Such information is insufficient in several circumstances.

The consumer of our society is intelligent, he likes to know the item he buys and to compare. Due to these investigations and complaints, the regulation of the European labeling system is being discussed in order to make it more transparent. In this way, in the face of a food alert, it will be much easier to detect the affected products, for example.

With the black mark system, the quality of the offer is not put into question, but the lack of information that reaches the consumer.

It is worth saying that the marketing companies may not fully agree that the labeling provides all the information to the consumer. This, because the public can discover, for example, that the manufacturer does not have prestige.

In other words, the leading company could lose market share if it reveals who the manufacturer of the product it distributes is.

Examples of black marks

We can present some examples of black marks:

  • Nestlé and R&R Ice Cream: Nestlé markets under its brand, leader in its sector, products from the British R&R Ice Cream.
  • Kellogs and Gullón: The Gullón factory in Palencia produces cereals for the well-known Kellogs brand that are marketed under this name.
  • Inopack, Vitalinea and Lidl: Inopack manufactures yogurts that go to Lidl supermarket distributors as their private label. However, these dairy products are also marketed under the well-known brand name Vitalinea.
  • Renault and parts manufacturers: Multiple parts are needed to assemble a car. The Renault firm, for example, is not the manufacturer of these auto parts, but only takes care of the assembly, the design of the model and the quality standards. The construction of the parts is outsourced to auxiliary companies such as Gestamp or Grupo Antolín, which in turn supply other leading brands such as Ford.

Fernando Olivares, professor at the University of Alicante, in his book "Brands Rebellion", cites more than 40 brands that they manufacture for others.

Difference between black marks and white marks

A white label is the brand of a distributor (a supermarket, for example), under which products manufactured by other companies are marketed, and at competitive prices. A clear example of this model in Spain is Mercadona's strategy, with products such as Hacendado (pastries and cereals) whose manufacturer is Grupo Siro.

The difference with black brands is that they are sold at a higher price because they meet the quality and positioning standards of well-known brands. However, the reality is that there is not as much transparency when it comes to determining who that producer is, as is the case with private labels.

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