Brand names face uphill battle

Posted by Daniel Palmer on 27th October 2009

Consumers who are buying more private label brands say they won’t return to name brands in the foreseeable future, the yearlong shopper experience study currently underway by American-based The Integer Group and M/A/R/C Research has revealed. However, brand names still have the opportunity to claw back market share with sound strategy implementation.

“Almost eight in 10 shoppers report seeking products on sale and comparing prices between brand name and store brands when buying groceries or household products,” Craig Elston, senior vice president at the The Integer Group, advised. “With this many shoppers doing price-comparison, name brands need to act now in order to keep consumers – and beyond the recession, entice consumers to return.”

Data indicates that only 37 per cent of consumers surveyed say name brands are more reliable and 39 per cent believe name brands are better quality products – with the majority contending that product quality of private label is similar to national brands. According to 84 per cent of consumers surveyed, brand names are believed to be more expensive. This data suggests that brand names must offer incentives to consumers or they risk losing them to private labels indefinitely.

“According to our survey, we see two ways brand names can keep consumers,” said Randy Wahl, executive vice president, M/A/R/C. “Consistently delivering on brand promises, and offering financial rewards such as coupons and discounting.”

Although the study shows consumers are most concerned about price, there are some brands, such as Kraft and Coca-Cola, that shoppers say they are least likely to trade for store brands.

Research in Australia and around the world has concluded that sectors with little product differentiation are ripe for private label growth, with basic commodities like eggs and flour attracting the highest private label share.