Much to Do About White

Twenty five years ago Loblaws changed the way Canadians think about white label products when they launched a small family of gourmet-positioned goods marketed under the President’s Choice brand.

Through effective marketing (The Insider’s Report – a mini publication full of product innovations and exotic meal ideas sent to millions of households in Canada) and consistent messaging (“value gourmet”) they moved an ultra budget-conscious proposition to something much more sexy, convincing consumers that name brands weren’t always the answer.

And they weren’t the only ones who saw the lucrative potential of private label retailing. The Private Label Manufacturers Association reports that store brandsOther examples include:
Kirkland (Costco), Great Value (Wal*Mart), 365 Everyday Value^® (Whole Foods Market^™), Life Brand (Shoppers Drug Mart), plus a whole myriad of exclusive private label brands offered by retailers like Zellers, Target and Home Depot. now account for one of every five items sold in U.S. supermarkets, drug chains and mass merchandisers.

Last year, private-label market shares grew 0.8 percentage points to 21.9 percent of volume and 0.7 points to 17.1 percent of dollars in all package-goods categories and retail channels last year (Information Resources Inc.). This trend is expected to continue through 2009 as consumers look to cut costs. See more private label stats.

• Store brands represent more than $65 billion of current business at retail and are achieving new levels of growth every year.
• Private label products account for more than $81 billion in the U.S, up 10.2 percent over the past year, according to Nielsen Co. data of U.S. grocery, drug and mass merchandiser stores, including Wal*Mart, for the 52 weeks ending Sept. 27.
• 63 percent of consumers believe private label brand quality is as good as name brands, while one-third of consumers said they consider some store brands to be higher quality than name brands.

So how do name-brand marketers protect themselves against white labels, especially when recession reaction is pushing consumers towards lower priced private label propositions?

Private labelsFor this discussion we have not addressed the newest wave of exclusive designer name private labels which are a somewhat different beast, but who are not immune from this “value-price” stance. generally position themselves as “value-priced offerings (mainly through competitive pricing) that deliver the same benefits as comparable name brand products.”

Unless it’s already the core brand strategy, name brands should not be competing on price, but focusing on other aspects of product value where they have the advantage (i.e. innovation, category leadership and perception of added value).

Now’s the time to clearly communicate added value to your female customers and seize control of the market sector or niche you’re playing in. This requires a solid understanding of the lifestage they fall into, and how this affects the way they assign value to your product.

In today’s socially hyper-connected world there are many ways to leverage relationship marketing with women customers to strengthen the brand proposition and communicate brand value. It’s time to speak directly to your existing consumers and remind them why they love you so much. See also Mars, Venus and the Economic Downturn.

Product innovation is another long-term strategy that takes a clear swing at the price-value proposition. Private label products can’t be “as good as” if good just got better. To get the most out of this strategy it is important that you know whether the customer you’re targeting finds more value through an emotional connection or functional benefit.

Finally, consider direct tactics that can add value to your price proposition such as incentives that encourage customers to come back for more, or partners looking for cross-brand promotions that will add value in the minds of your customers. Online coupons are getting a bit of attention recently, but before you jump on the bandwagon, be sure to carefully assess how they affect your overall value proposition. See our article Coupons: The New Black.

Tough times are ahead, but don’t despair. Now’s the time to strengthen what you’ve got. Fight the White.

Mars, Venus and the Economic Downturn

While uncertainty swirls around the length and impact of our current economic slump, two things will remain more certain: consumers will continue to consume and women and men will continue to see the world differently. The XX Factor breaks down some factors that could help marketers find reason for optimism amidst the gloom, when communicating with women during the recession and beyond.

A Triple Play of Recession Behaviors to Watch

The XX Factor looks at three recession behavioral trends that might just trigger longer-term marketing to women opportunities.

1. Birth of the recessionista

   Even in a recession, women are reluctant to sacrifice style for savings. Witness the birth of the “recessionista” (fashionista meets the recession). The idea isn’t new - The Great Depression and recession of the late 1980s (i.e. Donna Karan and DKNY) gave birth to stylish but more value conscious fashion brands.  But what does it mean for marketers?  It’s still chic to be stylish, but potentially uncool to flaunt high-end tastes (just ask Sarah Palin who took a hit for her $75,000 Neiman Marcus wardrobe). There’s a huge opportunity to give women options to show off their budget smarts, when they don’t have to sacrifice style to do it.

2. Just do it …at home

   Many women are finding do-it-at-home options to higher priced services. Example: UK retailer ASDA (part of Wal*Mart) reports a 30% increase in sales of boxed hair coloring products, while business is down at 72% of hair salons surveyed by the National Cosmetology Association. For marketers it’s an opportunity to help women take formerly out-sourced services into their own hands, especially when they can reap the satisfaction of achieving professional looking results on their own.

3. Eating in – the new going out

   When money gets tight, one of the first things to go is eating outAccording to the National Restaurant Association, restaurant sales, after rising steadily for 16 years, slipped by 1.2% last year and are expected to drop another 1% in 2009.. In a USA Today/Gallup Poll, 81% of moms said they have cut back on eating out and 72% have reduced out-of-house entertainment.  It’s all about entertaining in the home and helping women do so is a key marketing opportunity. Brands that can play a role in making this happen have a leg up (think cooking classes!The Institute of Culinary Education in New York saw a 32% increase in registration for classes for non-professionals in September, followed by a 17% increase in October.
   
   (Source: “From Dining Out to Cold Turkey” - New York Times, December 9, 2008)).

Coupons, The New Black?

“I was at the Food Emporium in Bedford…,” recounts one Greenwich woman. “The well-dressed wife of a Wall Street guy was standing behind me…she said, ‘Have you ever used coupons?’ I said, ‘Sure, maybe not lately, but sure.’ She said, ‘It’s all the rage now — where do you get them?’”

— Vanity Fair.  January 2009.

The New York Times has dubbed the coupon “the season’s must-have” and three-quarters of respondents to a recent Harris Interactive poll agreed that they are more likely to return to a store that offers coupons.  Welcome to the new thriftiness.

At a time when savvy female consumers are more cost-conscious than ever, coupons are experiencing a resurgence (see also Mars, Venus and the Economic Downturn).  But how does a marketer offer discounts without diminishing the value of his/her brand?

Next time you’re considering a coupon, consider this:

• Limit the value to bulk purchases. Rather than offering a tube of toothpaste for $2.00, offer $2.00 off a purchase of three or more tubes.  You maintain the perceived value of your product while encouraging consumers to stock up. 
• Trade discounts for information. Use the offer of a lower price to learn more about your consumers.  For example, blogger Money Saving Mom (“helping you to be a better home economist”) promoted a recent Starbucks offer to her readers: register your Starbucks card and earn a free beverage.  This high-value offer helped grow the Starbucks database and rewarded value-hungry consumers, without making Starbucks seem any less premium.
• Coupon to committed consumers. Blasting a coupon out to thousands of potential shoppers through an FSI or online offer might appear to be a wise option to reach price-conscious consumers, but could cheapen the overall value perception of your brand. Focus your coupon efforts instead to loyal consumers registered in your database to encourage purchase among this more targeted group of consumers.