Friday, 25 May 2012

It’s NPD but not as we know it…

Research has revealed that launches of own-label products overtook those of branded goods for the first time last year. The economic imperative, renewed promotion behind own brand value and prestige ranges coupled with a consumer shift away from the perception that own brand products are inferior to their branded counterparts are among the reasons why. But what are the implications of this for brands and how can they compete against own brand products? What makes us favour a branded product versus an own brand product and are we moving to a stage of own-brand only categories or even supermarkets? The first point to make, of course, is that own label npd is not always new product development in the sense that brand owners might mean - own label innovation is often (and unashamedly) as much about copying than creating new products. Although this is not completely true as in some categories, e.g. fresh food, own label drives some innovation; but generally speaking much supermarket own label is a copy of a branded product. In fact we’re even moving into an area of 'phantom brands', own label products that don’t carry the retailer’s name. Retailers might counter that they invest a lot in creating their (cheaper) copies of branded products and the consumer benefits from this. And they would also say that their innovation is not just skin deep. When ASDA relaunched its standard own label range as "Chosen by You" they made a play on the fact that each product had been tested and rated highly by its consumer panel, thus implying an active product development process. And Tesco recently claimed that the launch of its new Everyday Essentials range was much more than a rebranding exercise – their fish fingers are fishier! So brands need to make sure they remain relevant to their buyers and offer something that justifies the price premium. Many brands remain successful in convincing consumers they are better than own-label, so it can still be done. For whatever reason, the ketchup, salad cream and baked bean markets continue to be dominated by Heinz, whilst for many consumers Coca-Cola is and will remain the real thing. In addition, some brands are perceived as offering better value despite a higher price point. Many consumers are willing to pay a premium for Fairy Liquid in the expectation that they will get more washes from each bottle. But other factors are also at play. Cash strapped mums might buy branded products for other members of the family, including their pets, but will buy own-brand products for themselves; whilst some consumers are influenced by ethical sourcing or charity links to particular brands. There’s plenty of evidence to suggest that on laundry products consumers retain their belief in performance and claims about the ability of a product to clean whiter than its own brand competitors. So yes, we are happy to buy more and more own brands but we still somehow see them as second best. If, as had been suggested, consumers now have greater faith in own label products as a result of a significant improvement in quality, that’s surely not a bad thing? But it does throw down the gauntlet to brands to find new points of differentiation and new ways of making themselves an indispensible part of our shop, now that our loyalty to branded products seems to be growing looser all the time.

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