Product labeling serves multiple functions that help ensure you meet your sales target while still complying with numerous labeling requirements to avoid lawsuits.

A good product alone will not be enough to achieve the sales you want without a highly effective and compliant product label. Regardless of how simple this piece of paper may look like, it has a huge impact on the overall image of your product as well as your brand. It has the power to either make or break a sale within a matter of seconds.

After understanding the importance of products labeling and learning the features of good product labels, you should also know the important functions of labeling products here.

What Is the Purpose of Product Labels?

A label is an essential feature of a product that aims to communicate information about your product to customers to convince them to buy your product. Product labels allow your customers to know the content of the product especially the presence of allergens and how to properly use it.

Although the main purpose of product labels is to inform, they do have other important functions like the following:

  • Providing your product identity through branding
  • To make product categorization easier for products with variants
  • To promote persuasive characteristics of your products
  • To protect your customers as well as your brand by complying with labeling regulations

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What Are the Functions of a Product Label?

Below is a more detailed discussion about the purpose or functions of product labels:


Product Content & Usage

Labels provide relevant information and complete identification of a product’s nature and usage aside from marketing the product. This information usually includes the following:

  • Ingredients
  • Usage
  • Caution when using
  • The expected life of the product to prevent spoilage especially perishable products
  • Nutritional content (cholesterol, calories, total fat, dietary fiber, minerals, vitamins, sodium, protein, etc.)
  • Percentage daily values per serving
  • Warnings for toxic products and what to do in case of emergency

Putting a product’s complete ingredients list on its label is very important for consumers to know whether the product contains ingredients that they are allergic to. Ingredients should be listed in order of their predominance in the product based on their weight. The percentage daily values/serving of each item in the ingredients should also be present. This will help consumers with special dietary requirements or those who want to keep a balanced diet.

Another thing is information on the proper use or preparation of a product as well as how to store and clean it, whichever information is applicable to the product. For medications, dosage and warnings about drug interactions are included.

Below are other details that are also included in product labels:

  • Product codes to provide pricing and inventory information for resellers and producers
  • Other information that is not legally required to make the label more user-friendly and avoid losing sales



One of a product label’s central focuses is your brand name which helps identify a product easier. Not only that, other elements such as graphics, designs, color schemes, brand marks, and logos also help identify a product that belongs to a brand.

A good label will help customers with previous knowledge or experience about a certain brand easily find the product they want among a huge assortment of products on the shelf. In addition, putting the manufacturer and distributor can help attract customers, especially if the manufacturer/distributor is a well-known one.

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If you have a product that has different features, labeling helps you identify which product variant has what certain feature. A grade label is often expressed using a letter or a word. For you to understand what we mean, below are some examples:

  • Beer

Most often, beers are categorized according to their alcohol strength such as mild or strong. 

  • Tea

Manufacturers that produce different kinds of tea will use multiple label colors to differentiate them.

  • Shampoo

All shampoos come in different types and manufacturers often change the product’s packaging style, design, or label to make each type unique. Some would even label them as anti-dandruff, silky straight, intensive moisture, brilliant shine, and other similar label grades.


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Labels are heavily used in promoting sales by creating a well-crafted one. Labels have always been effective in fulfilling this purpose. Yes, the brand name can be enough to urge customers to buy your product but using labels helps you promote your product effectively.

Adding colorful and creative graphics will make your product pop out from the shelf despite the many other brands surrounding it. This creates a higher chance that a customer will notice your product first and can turn potential sales into actual sales.

Some of the most effective promotion strategies used by companies are the following:

  • Adding persuasive characteristics to the labels such as “vitamin-enriched” or “low-fat”
  • A “Buy 1 Get 1”, “Buy 2 Get 1”, or other similar labels (this is usually seen during festive seasons which allow customers to save more money)
  • “Get something % more” label types

The above promotion labels can easily draw a customer’s attention who will most likely choose your product instead of other brands to get the best value for their money. These labels are commonly seen in supermarkets and aim to convert prospects into customers.


Consumers Protection / Compliance

As we have said earlier, product labels need to comply with a lot of labeling requirements. Before you create a label, make sure that you consider all requirements to avoid lawsuits.

The information you put in your labels is not only aimed at compliance but also to protect your consumers from accidents due to product misuse. Such crucial information includes safety instructions and statutory warnings for poisonous or hazardous products like cigarettes.

Also, providing detailed information about your product’s potential hazards protects your company from serious legal problems. By including potential hazards in your labels, you can protect your business from customers who are planning to misuse your products.

You can read our blogs below for a more detailed discussion about the regulations you need to comply with for your product labels.

In addition, to give you an idea of the many laws and regulations you will be dealing with, we have summarized the most important ones that are designed for protecting consumers below:



Federal Trademark Dilution Act

  • Protection of trademarks for trademark owners

Nutrition Labeling and Education Act

  • Nutrition labeling requirements of foods

Federal Trade Commission Improvement Act

  • Warranty rules on consumer products
  • Provides consumers with redress through a class action lawsuit

Consumer Product Safety Act

Gave power to the Consumer Product Safety Commission to do the following:

    • Perform product tests
    • Create product safety standards
    • Seize or ban hazardous products
    • Issue criminal and civil complaints against businesses that don’t comply with the safety requirements

Cigarette Labeling Act

  • Requires cigarette ads and packages to include the “Warning: The Surgeon General has determined that cigarette smoking is dangerous to your health” statement.

Fair Packaging and Labeling Act

  • Sets packaging practices for easier comparison of prices
  • Adequate labeling on the product content composition and quantities
  • Outlaws deceptive consumer goods packaging

Federal Hazardous Substance Labeling Act

  • Warning requirements for household product labels containing hazardous ingredients

Child Protection Act

  • Prohibits selling dangerous toys as well as other products for children especially those containing thermal, mechanical, or electrical hazards

Lanham Trademark Act

  • Protects trademarks, trade names, brand marks, and brand names

Wheeler-Lea Amendment to the Federal Trade Commission Act

  • Controls misleading and deceptive advertising
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