Friday, November 2

Branding Loyalty: Big Brand Vs. Store Label

According to a study by the Integer Group® and M/A/R/C Research, 77 percent of general shoppers compare store brands to brand names. The downside? Most of them (90 percent) won't risk the change.

"Certain categories appear to be immune to the store-brand swap," said Craig Elston, senior vice president, IntegerTM.
"Categories that offer shoppers frequent innovations such as performance or variety, and categories where personal stakes are higher, are more difficult areas for private [store] label products to compete."

The study noted several exceptions across various demographics. About 76 percent of African-American shoppers (and 69 percent of shoppers, in general) will not swap laundry detergent. The brand is too important to them.

Health and beauty is also a category where shoppers prefer a brand name to a store label. Seventy-four percent of Hispanic shoppers (and 65 percent of general shoppers) will stick with their brand.

Trust and the perception of quality dominate decision making.

Part of the reason is associated with the perception of quality. As long as a brand can keep its brand promise, store labels will have a difficult time finding any leverage. In fact, trust accounts for 51 percent of a purchase decision, much higher than influencers, online reviews, or any other factor.

Store labels have an additional challenge too. Lower quality store labeled products have led to fewer store label shoppers than two years ago. And to compensate, retailers haven't done much more than building better brand identities (e.g., nicer packaging). They ought to focus on better products.

Case in point: When customers were asked if they thought the packaging had improved, 14 percent said that the labels do look better. However, even with better packaging, they prefer the brand they trust.

There is one exception highlighted by the study.

Sixty-eight percent of the shoppers prefer store label brands (generic) in the over-the-counter medicine category. But this unique outcome has much less to do with the identity and more to do with a cultural phenomenon tied to an external directive — insurance companies, health care providers, and some doctors have convinced consumers to look for generic first. Consumers have adopted this mindset across the board.

Without any external directive, implied or mandated, customers rely on brands that deliver on their brand promise. You can find the study here (which includes the common lead generation form).

While the study is interesting, it does miss some deeper issues related to consumer psychology as well as a holistic definition of brand loyalty in that it is much more than an identity. Ergo, the trust factor is directly tied to the relationship between the brand and the consumer. Identity only reinforces familiarity.

Where supermarkets and retailers attempting to introduce store labels frequently make a mistake is they try to entice consumers based on price points. With the exception of price point shoppers, most consumers are only motivated when their preferred brands break a promise (quality failure), do not meet a specific need, the product is temporarily unavailable and there urgency in finding a replacement, or there is an external driver (like health care policies).

If you focus too much on true price point consumers, marketers have to appreciate that they are only their customers for as long as the low price can be maintained. (Price point shoppers have no brand loyalty.)

Likewise, free samples aren't enough either. While customers will sometimes be receptive to a free sample, their purchase decision in the future will only be swayed when their preferred brand has been compromised by one of the four points mentioned above. In fact, many consumers accept free samples strictly to reinforce their brand loyalty to the preferred brand.
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