Final answer:
The primary drawback of selling private-label merchandise is the struggle to build Brand Loyalty that well-established brands already possess due to their substantial investments in marketing and advertising.
Step-by-step explanation:
A drawback of selling private-label merchandise is Brand Loyalty (B). Private-label brands often struggle to create the same level of brand loyalty as established brands. Companies like Coca-Cola and Pepsi have spent enormous resources on advertising and marketing to establish strong brand recognition that private labels find challenging to compete against. Building a well-respected brand name requires significant investment and time.
More established names have the advantage of economies of scale and can often afford to slash prices to outcompete new entries in the market. This makes it difficult for private labels to gain a foothold. Additionally, consumer preference for well-known brands can lead to increased marketing costs and a need for product differentiation, which can further erode profit margins for private-label goods.