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- 5 ways to compete with budget brands and own-label
- Tell the brand story.. and keep telling it.
Your brand’s story is what people buy into, but it needs to be the foundation of everything the business does, not just a TV advert or a piece of online content.
Food and drink brands, more than any others, have great stories to tell. These stories have to be told if they want to differentiate themselves and offer a reason for consumers to buy their products over cheaper own-label alternatives.
Some brands have more compelling stories than others: KFC, Papa John’s Pizza, Jack Daniels etc. But even without a charismatic founding father or mother, there are still stories to be told. For instance, Meridian Peanut Butter is made of 100% peanuts, including the skins. They don’t use palm oil, which not only means they can squeeze more nuts in, but they also help towards the fight against deforestation and the preservation of Orangutans.
It’s these stories consumers want to hear as it reassures them that they have made the right purchasing decision, even if they are paying twice the price of own label.
- Consumers (and retailers) love Premium
Consumers will pay for premium. And with the product quality of own-label being better than ever, positioning your brand towards the premium end of the spectrum can give it clear distance and differentiation between own-label. Consumers need to believe they are getting a different experience for the price and to be able to justify the purchase to themselves and, sometimes, their peers.
Telling the brand story, through every communication (from packaging to advertising) is a way to entrench the ‘reasons to purchase’ in the psyche of the shopper.
Without the clear distinction between your brand and budget brands, the product can become commoditised. When this happens, the battle ground becomes one of price – and the supermarkets will win this every time.
Premium (or even mass premium) can protect your listings, and allows you and the grocery multiples to enjoy greater margins.
- Invest in brand communications
Although the perception of own-label is changing, and the more categories grocery multiples sell own-label in the more trusted they become, the investment consumer brands make in building brand equity provides a relationship of trust between the brand and consumer.
Coca-Cola’s brand awareness is 90%; the brand is the generic in the market, but they still advertise heavily. Why? Because distribution can only do so much. Building brand equity protects the listing, price and builds connections with consumers, so when they are at the point of purchase, they are more likely to choose your product over another.
Many small brands believe they can’t afford to build brand equity through advertising. With media being so fragmented and digital media allowing demographical and geographical targeting, there has never been a better time for small, regional brands to grow their brand equity – starting from their heartland.
Fuller’s London Pride did exactly this. They told their brand story of the pride of being a London brewer and the pride employees take in making the beer. Although a national brand, they focused their media attention to where the majority of their distribution was: London and the South East. And it worked. In London, they outsold their closest rival by 45%.
It used to be brands led for own labels to follow. Brands tended to invest in NPD only for own-label to hijack the successful product innovations. The balance changed in 2012; 52% of NPD was for own-label.
Brands need to reclaim this ground. Product line extensions, packaging innovation and new products can play a role in competing against own-label, but should be used cautiously. NPD is expensive, many new products fail and new lines can confuse loyal customers. But it can also be a way to differentiate the brand and if there is a genuine need, present a reason for consumers to choose a brand over own-label.
- Dial up on the emotional benefits
It’s necessary to create and also communicate the value consumers will get buying your brand over own-label. This value has both rational and emotional elements to it. Own-label can compete well on the rational side, but where brands can win the fight is on the emotional side. If a brand engages with the consumer on an emotional level, the consumer will assess whether the price is competitive with the own-label choice. If the price gap is acceptable, then they will by the brand.