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November 6, 2008

Store Brand Naming Being Held Captive?

genericstorebrand.gifThe Wall Street Journal recently suggested that frugality is trumping brand loyalty at the checkout line as consumers become more and more attracted to less expensive store brands.

This issue of bottom-line over brand is one I have examined before.

Store brands have come a long way from the boring "no names" of the recent past, offering a level of sophistication behind their brand naming strategy that is just as well thought out and planned as that of the major CPG companies.

Recession-proof branding is calling for brands across the board to sharpen their vision and cut costs to become more competitive. Store brands are masters of this strategy and consumers know it.

Wal-Mart, CVS and Walgreens now refer to their store brands as "captive brands" in an attempt to make them sound more appealing, although it kind of sounds like their products that are being held hostage. This "captive" renaming makes it even more interesting to hear that some consumers buy the store brand product and then set if free by transfering it into a brand name container.

We've seen this trend towards buying store brands the last few years, especially with retailers like Supervalu (Cub Foods, Bristol Farms, Shop'n Save, etc.), Kroger, and Safeway who have shown significant gains on their store brand offerings.

The real gains, however, are made "where the fancy national brand hasn't noticeably differentiated its products."

The Wall Street Journal has reported that consumers find it hard to even tell the difference between a store brand and national brands when it comes to paper products, while private label personal care products have also seen a huge surge in sales.

Of course, this private label preference is partly due to the recession, but it is also due to the fact that CPG companies often face brand name dilution. Even in recessions, consumers tend to remain loyal to the brand names they feel very strongly about and scrimp on the ones that seem to matter less.

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Posted by William Lozito at November 6, 2008 10:28 AM
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1 Comment

Wonderful, but known =)

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