By: Terry Fine
If you still think house labels are limited to the world of supermarkets’ store-brand condiments and department stores’ budget clothing lines, you haven’t been paying very close attention to the dental industry. As consolidation and technology change the industry landscape, many laboratory owners are increasingly turning to private-label marketing to boost their margins. While private labeling can be effective, like every strategy, it isn’t without its costs. Before launching a rebranding campaign to private label your zirconia or removables, it’s important to consider how the decision impacts your laboratory—and if that decision supports your laboratory’s strategies.
Pro: Resist Commodification
The commodification of zirconia crowns has already started, as many dentists are starting to view zirconia formulations as interchangeable. When they do, that leaves you with only one area to compete in: price.
Rather than joining the race to the bottom, private labels sidestep the commodity trap, providing you an opportunity to articulate the valuable differences between your zirconia and your competitor’s zirconia. A private label isn’t just a name for a material; it represents knowledge and customer service you put into every restoration.
Con: Lack of Marketing Support
If you offer a brand of zirconia from a major manufacturer, you’re capitalizing on all the marketing dollars the manufacturer spends communicating directly to dentists. Dentists who don’t view zirconia formulations as interchangeable may be hesitant to try private-label zirconia.
Pro: Improved Profit Margins
If your laboratory has the volume and cash flow to purchase zirconia directly from Tosoh or another extraction firm, you’ll probably be able to produce a house brand at a lower cost. With lower materials costs, you’ll have the opportunity to increase your per-unit profit margins or compete on price against national brands.
Con: Increased Inventory
Most manufacturers will not deal directly with laboratories placing small orders, so you’ll likely need to purchase discs in quantities that far exceed your typical order.
Although shelf life is not a concern with zirconia, you will need to tie up large amounts of capital in inventory. While many laboratories view this expenditure as a long-term investment, you’ll need the cash flow to support the initial outlay.
Pro: Extend Your Brand
If you’ve cultivated a strong brand for your laboratory, it’s a natural next step to begin carrying that brand into private-label products. Mirror your laboratory’s primary value proposition for synergy with private-label restorations.
If you’ve positioned yourself as a value laboratory, your private-label zirconia should offer a competitive price point. If you’re a boutique laboratory, stress your house label’s superior esthetics and the extra attention your technicians place on design and finishing services.
Con: More Branding
If you’re the sort of laboratory that concentrates more on operations than on building a brand, then developing an identity for a house-label zirconia may be an uphill battle. Although this won’t be an issue if your dentists view zirconia as a commodity rather than a branded product, you will need to lay some sort of marketing foundation for your private-label products.
Pro: Control of Your Product
Even if you’re merely purchasing zirconia from a major manufacturer and rebranding it as your own, offering a private-label zirconia gives you the flexibility to change suppliers in the future if quality, pricing, or other issues arise with your choice of zirconia.
A lot of give-and-take is involved in the decision to private label your zirconia, but you’ll need to take a holistic view of your laboratory’s operations when you weigh the decision to introduce a house label. Even if you have the capital, marketing support services, and patience to brand and launch a house-brand zirconia, your existing dentists simply may not support your move.
Ease your transition to private-label materials by offering a name brand and your house label simultaneously. This strategy gives dentists the opportunity to prescribe the brands they’ve come to trust, while giving you an opportunity to communicate the value, quality, and savings of your private-labeled zirconia when consulting on cases.
A change to private labeling isn’t for every laboratory. If it works for your business model, it can offer avenues to boost your profitability—but only if you’re committed for the long run. Great private labels aren’t created; they are nurtured over time.
Terry Fine is President of AMG Creative in Fort Collins, Colorado.