Consumers are more often turning to store brands and “generic” brands instead of the big name brands.
http://www.inc.com/news/articles/2009/05/store-brands.html
This is not a short-term trend merely due to the current economic downturn. Consumers are finding similar or the same quality between the name brands and store brands, and the price difference between the two makes the decision to switch to store brands likely to be long term (or for good).
Name brands have the marketing muscle and instant recognition that the store brands don’t have, and may never have. Name brand marketers always cite “top of mind recognition” as a key measurement of marketing and advertising success. I argue that simply because you mention “soup” and most consumers say “Progresso” or “Campbell’s” doesn’t translate to success in the aisle–SALES–the most important measurement for marketers.
Consumers are increasingly turning to store brands for facial tissue, toilet paper, napkins, paper towels, canned goods and more. A consumer may think Puffs when thinking about facial tissue in general, but they’re becoming more and more likely to buy Target brand facial tissues when it comes time to buy.
The big question for name brands is: Now what? Is this a short term name brand problem that will be remedied when the economy improves? They’ll likely see a bit of an improvement, but the damage is much deeper and will be longer-lasting than name brands would like to believe.
Can name brands compete on price? Not likely, since that would “damage the brand.” Name brands never want to compete on price. The goal is to differentiate, show consumers that the extra value they receive from your brand and paying a premium price are worth it and will make their lives better.
Can name brands differentiate enough to convince consumer to buy name brands again? Yes, but the marketer’s job just became even tougher, and so did the product manager’s job, and operations, and manufacturing and research and development. They’ll all need to work even harder to make products that will grab market share at a reduced premium. Costs will need to be controlled even more since consumers will be more reluctant to go with the name brand over the store brand. Marketing will need to be stronger to create a compelling story for the premium product.
The game has changed. For good.
