What is gray labeling?

Gray labeling is a type of labeling strategy in which a product is developed by a manufacturer but is marketed and sold under the brand name of a third-party company. This means that the product is actually manufactured by one company but is sold by another company under its own brand name. The gray label product is basically identical to the manufacturer's original product, but it has a different name or logo on it.

Gray labeling is sometimes used as a cost-effective method for companies to expand their product lines or enter new markets without investing in manufacturing and production facilities. For example, a small company might lack the resources and expertise to develop its own product line, so it could turn to a larger manufacturer and use gray labeling to market these products as its own. This approach allows the small company to offer a wider range of products to its customers and compete with bigger brands without having to invest in production facilities and research and development.

Gray labeling is also used in the IT industry, where it is known as white labeling. This is where one company creates a product, such as software or hardware, and licenses it to another company who rebrands it under their own name. This allows the second company to avoid the costs of developing their own product from scratch, while still being able to sell a product under their own label.

Overall, gray labeling can be a mutually beneficial strategy for both the manufacturer and the company who is selling the product. The manufacturer benefits from increased sales and exposure, while the retailer benefits from access to a wider range of products without having to invest in manufacturing and production.