Horror movie: “The product that brands forgot”
Came across this research from Consumer Reports, where own label products were compared against leading brands, which were often double the price. The report’s a couple of years old, but I doubt the results would be that different today. I know you may be covering your eyes, scared to look. And with good reason; this is a horror movie called "The product that brands forgot".
Surprize, surprize, store brands did a good job of matching leading brands, and in come cases even came out top (Costco’s Kirkland Signature laundry detergent, Kroger’s 4-cheese pizza, and Wal-Mart peanut butter).
Branding ideas such as Lovemarks have encouraged marketing people to surrender the product advantage, and seek salvation in sizzle, by spending lots of money on nice advertising. A great rant of a quote in the brand vision book dramatises the mess we’re in, from David Thomas of MMR:
marketing dinosaurs still believe that ‘A great brand need only be
supported by a mediocre product’ What arrogance! Little wonder so many
FMCG brands got found out and, in the end, consumers refused to pay the
premium. The upshot of this could be the total
elimination of brands in some categories, leaving only a few
mega-brands and a plethora of retailer brands."
You end up in this completely crazy conversation that I’ve had with many brand teams:
DT: "So, how expensive are you versus the own label guys?"
Brand manager (BM): "About twice as much"
DT: "And is your product any better?"
BM: "No. Not really."
DT: "So, how come you cost twice as much?"
BM: "Because we advertise on TV"
DT: "And why do you advertise on TV?"
BM: "Its obvious. We have to support our premium price!"
DT: "But you’re only more expensive becuase you advertise!"
With advertising the only difference to support a price premium, it’s not surprize that own label brands in the UK have grown their share of UK grocery sales from 22% in 1981 to 42% today.
Now, for sure, its hard to compete with own label, given the advances in technology and the raft of companies willing to make great product for the supermarkets. This is especially true in food and drink, where the barriers to copying are low. But is the only solution to then give up, and say that product differentiation is now impossible to attain, a distant mirage, and focus instead on trying to inject emotional appeal into me-too products.
Surely not? Isn’t this as much to do with mind-set, ambition and focus?
I think great brands can survive and prosper by maintaining a product edge. And in my next post, I’ll suggest several ways that brands can do this.