It’s a tough time out there for food and drinks brands. It’s a pivotal time, as rising inflation eats away at consumers’ wallets, and standards of living. So how can national brands stay attractive in the current climate?
Shoppers are navigating this difficult time by assessing household expenses and re-evaluating their loyalty to brand-name products. More consumers wonder whether the additional cost of branded products is justified. In some categories, up to 62% of consumers have said they are spending less or buying cheaper products.
Private or ‘own’ Labels offer quality products at affordable prices. Over the last two centuries, Private Labels evolved from basic, cheaper products into branded low-cost alternatives, a genuine competition to the National Brands like the Coca-Colas and KitKats of the world. Case in point, 83% of retailers plan to increase investment in private labels in the next 12 months.
It’s worth noting that Private Labels, like National Brands, are not immune to increased costs. However, own brands often start from a lower price point, giving them the upper hand despite inflation.
Having said that, we can identify the following changes in consumers’ behavior:
- Decreased purchasing power. People are carefully assessing their income and expenses.
- Prioritizing essentials. People prioritize essential expenses such as food, housing, utilities, and healthcare over cravings or premium goods.
- Becoming more price-conscious. People have become more price-sensitive and actively seek discounts, promotions, and value-for-money offerings.
So, how can National Brand stay top-of-mind for price-conscious consumers?
Let products speak for themselves
Consumers are willing to pay extra for superior quality and trust put in the brand to deliver that quality consistently. Moreover, brand-name products offer the prestige or hype unattainable with Private Label products that consumers are still longing for in these tough financial times. That prestige can only be achieved with long-term branding and storytelling efforts.
And there is the brand’s emotional appeal. People, especially Gen Z, are willing to pay more for products that make them feel good. Those consumers are passionate about products that integrate with their values and connect with them more personally.
Another way National Brands can win over shoppers is by emphasizing that their products are sustainable, made organically, or with 100% recycled packaging. Of course, there is a point at which being environmentally conscious is outweighed by price concerns. It’s called the price elasticity of demand. For example, in a survey conducted by McKinsey, people said that they are willing to pay more to be green, but at most 25% more. Analyzing the price elasticity of demand in your category can prove beneficial, enabling you to understand your customers better.
However, without outstanding brand equity, price-conscious consumers might still favor the cost-effective option.
Measuring Marketing Effectiveness
Marketing is a double-edged sword for National Brands. On the one hand, brand-name products rely on advertising to reach consumers, which decreases margins and often therefore increases pricing. Conversely, effective marketing can give a brand a competitive advantage by increasing brand awareness, fostering brand loyalty, and directly impacting sales.
So, it comes down to the effectiveness of your marketing efforts.
The ProQuo AI brand tracking and consumer intelligence platform offers daily insight into your Brand Equity based on the 16 Drivers of Brand Relationships, so you can make sure your brand-name products are delivering on what people in your category need today. For example, you can determine whether your target consumers find your brand-name products innovative and accessible, or if they are perceived as offering good value for money.
Innovation is a significant factor when competing against Private Labels. For example, in the case of soft drinks, offering new flavors, sugar-free versions, or limited editions can attract new and existing customers, creating an emotional connection that can stand financial pressures.
Most importantly, on ProQuo’s live tracking platform, you can measure the instant impact of your marketing efforts in real-time and over time to get a complete picture of how your investments are working for your brand
If you want to understand the changing trends in your category and know how your brand and competition are stacking up based on your marketing investments, learn more about ProQuo AI.