Private label branding: Recession or no, it’s a trend that’s here to stay.

During the Great Recession of 2008-10, it was no surprise to see an increase in private label product sales – not just in food products but also in apparel, cosmetics and other consumer categories.

That was then …

It was much like a similar recessionary time in the United States history — back in the 1970s — when some supermarkets began selling “generic” packaged and canned goods. Those offerings celebrated their generic status by emphasizing their lack of branding – ostensibly to demonstrate that by cutting back on marketing and advertising costs, product pricing to the consumer could be kept lower.

The generic movement didn’t last. When the economic go-go times returned in the mid-1980s, consumers were more than happy to forego the cheaper offerings and go back to their favorite brands.

But the situation is different today. The Great Recession may now be a decade in the rearview mirror, but the private label brands they spawned are going strong.  In fact, they’re thriving as never before – and in some ways are eating the legacy brands’ lunch.

… This is now.

Several factors are fundamentally different from before. For one, products that compete on price are no longer being marketed as “generics” but rather as brands in their own right.  Brand names like Kirkland, Archer Farms and Essential Everyday look and feel like Kraft, Kellogg’s and other longstanding brands – and for the most part their quality is indistinguishable as well.

Equally important is that fact that there’s no longer any particular stigma associated with shopping “cheap” private label brands. It turns out that consumers in every income category appreciate a bargain; no one wants to feel like they’re being ripped off when there are good quality “best-value” alternatives available.

The usually prescient Warren Buffet appears to have been caught a little off-guard by the changing landscape, recently expressing surprise (and alarm) about this development. His Berkshire Hathaway enterprise took a $3 billion hit in the face of disappointing earnings as Kraft-Heinz share prices dropped more than 25%, thanks to strong competition from the private label alternatives.

Consider these eyebrow-raising statistics: Costco’s Kirkland house brand notched sales of $39 billion in 2018, which is substantially higher than Kraft-Heinz’s total brand sales of $26 billion.

Indeed, the consumer foods industry is witnessing this happening all over the place. Amazon may not be developing its own private brands like Costco or Target have done, but it is working diligently with food and beverage manufacturers to develop private label offerings to sell exclusively on Amazon’s own website.

Looking at the macro environment, the United States is running at historically low unemployment rates today, but that hasn’t stunted the phenomenal growth of discount grocery chains like Aldi and Lidl. Aldi has come from practically nowhere several years ago to threaten becoming America’s 3rd place grocery retailer, behind only Walmart and Kroger.  Aldi has done so by pursuing an über-aggressive private label strategy that’s targeting younger, middle-income shoppers in particular.

Note that Aldi is training their sights on more than just budget-conscious consumers, which have traditionally been the narrower audience for private label brands. It turns out that the “stigma” some might have attributed to the “cheap” image of private label foods isn’t there any longer.

For younger consumers especially, such “status” concerns are of no pertinence at all. Whereas the typical grocery cart today contains ~25% private label products, among millennials the proportion is more like one-third.

Based on these trends, it’s little wonder that a recently released Thomas Index Report reports that sourcing activity for private label foods is up more than 150% year over year.

And while the growth of private label products is most pronounced in the food, paper goods and household supplies sectors — and has had the most disruptive consequences there — other sectors like apparel and cosmetics are seeing similar developments.

[Let’s not forget private label pharmaceuticals, too, where price differences are often dramatically lower than just the 15-20% differential we see in the food sector.]

The bottom line is this: Recession or no, cheap has become chic.  It’s a trend that’s here to stay.  The legacy brands won’t be able to wait this one out and expect better days to come along again.

Which brands are “meaningful” to consumers? Not very many.

What makes a brand “meaningful”? Multinational advertising, PR and research firm Havas SA has studied this topic for the past decade, conducting a survey every other year in which it attempts to rate the world’s most important brands based on consumer responses to questions about select key brand attributes.

According to Maarten Albarda, the methodology behind the Havas surveys is solid:

“It looks at three brand pillars: personal benefits; collective benefits, and functional benefits — and then adds in 13 dimensions like environment, emotional, social, ethics, etc. plus 52 attributes such as ‘saves time,’ ‘makes me happier,’ ‘delivers on its promises,’ etc.”

The Havas research is both global and quantitative — including more than 350,000 respondents in over 30 countries.

The 2019 Havas research shows that ~77% of the 1,800 brands studied don’t cut it with consumers. This finding came in response to the question of whether consumers would care if the brands disappeared tomorrow.

That’s the biggest disparity ever seen in the Havas surveys. Two years ago, the percentage was 74%.

Which brands perform best with consumers? The top five ranked for 2019 are the following:

  • #1 Google
  • #2 PayPal
  • #3 Mercedes-Benz
  • #4 WhatsApp
  • #5 YouTube

Four of these five are brands that are all about “utility” — helping consumers deal with actions (watching, searching and sharing). The odd one out here is Mercedes-Benz — suggesting that there is something enduring about the time-tested reputation for “German engineering.”

What’s equally interesting is which high-profile brands don’t crack the Top 30. I’m somewhat surprised that we don’t see the likes of Apple and Coca-Cola in the group.  On the other hand, Johnson & Johnson comes in at #6, which seems surprising to me because I doubt that J&J has the same kind of consumer awareness as many other brands.

The Havas research reveals that the highest ranked brands are ones that score well on purchase intent and the justification of carrying a premium price. Repurchase scores are also higher, making it clear that a meaningful brand translates into meaningful business benefits.

In addition to reporting on international results, Havas also releases a U.S. analysis. Historically, U.S. consumers have been even more parsimonious in choosing to bestow a “meaningful” attribution on brands.  In fact, the percentage of American consumers earmarking specific brands as indispensable hovers around 10%, compared to the mid-20s across the rest of the world.

The reason why is quite logical: American consumers tend to have more brand choices — and the more choices there are, the less any one brand would cause consternation if it disappeared tomorrow.

Click here for more reporting and conclusions from the Havas research.

Facebook’s bad publicity in 2018 lands it at the top of the “least-trusted technology company” list.

The trust is gone …

One has to assume it’s a citation Facebook CEO Mark Zuckerberg has tried mightily to avoid receiving. But with a massive data breach last year and poor marketing decision-making accompanied by a wave of bad publicity, it shouldn’t come as a major shock that Facebook is now considered the least trusted major technology brand by consumers.

The real surprise is by how much it outscores everyone else. Really, Facebook’s in a class by itself.

Recently, online survey research firm Toluna conducted a poll of ~1,000 adults age 18 or older in which it asked respondents to identify their “least trusted” technology company.

The results of the survey show the degree to which Facebook has become the “face” of everything that’s wrong with trust in the world of technology.

Here’s what Toluna’s found when it asked consumers to name the technology company they trusted least with their personal information:

  • Facebook: ~40% of respondents trust least
  • Amazon: ~8%
  • Twitter: ~8%
  • Uber: ~7%
  • Google (Gmail): ~6%
  • Lyft: ~6%
  • Apple: ~4%
  • Microsoft: ~2%
  • Netflix: ~1%
  • Tesla: ~1%

The yawning gap between Facebook’s unflattering perch at the top of the listing and the next most-cited companies — Amazon and Twitter — says everything anyone needs to know about the changing fortunes of company image and how fast public opinion can turn against it.

About the only thing worse is not showing up on the Top 10 list at all – which is the case for Oath (the parent of Yahoo and AOL).  That entity has become so inconsequential, it doesn’t even enter into the conversation anymore.  That’s a “diss” on a completely different level, of course. As Oscar Wilde once said, “The only thing worse than being talked about is … not being talked about.”

What about you? Do you think that Facebook should be tops on this list?  Let us know your opinion below.

KISS and tell: Testing the notion that the world’s strong brands are “simple” ones.

When you think of strong brands, the notion of their “simplicity” might seem a bit surprising. And yet this is the contention of Siegel+Gale, a leading brand strategy firm.

S+G has gathered together its research findings in an annual ranking it calls the World’s Simplest Brands.  These are the brands that deliver best on their promise with simple, clear, intuitive experiences.

Howard Belk, the company’s CEO and chief creative officer, explains it this way:

World’s Simplest Brands quantifies the substantial monetary value of investing in simplifying.  Now in its eighth year, our study reaffirms an increasing demand for transparent, direct, simple experiences that make peoples’ lives easier … the data prove that simplicity pays.”

In order to research brand simplicity, S+G queried ~15,000 people living in nine countries (the United States, India, China and Japan plus several European and Middle Eastern nations) to evaluate well-known brands and industries on their perceived simplicity.

Among the findings in its most recent annual evaluation, S+G reports that political, economic and cultural uncertainty coupled with shifting customer expectations are contributing to a heightened desire for simplicity.

The value of simplicity manifests itself in a number of ways; two key ones are:

  • A clear majority of people (~64%) are more likely to recommend a brand that delivers simple experiences.
  • A majority of the survey respondents (~55%) report that they are willing to pay more for simpler experiences.

S+G calculates that companies which fail to provide simple brand experiences forego nearly $100 billion in sales revenues collectively.

Based on its research, S+G ranks the Top 10 World’s Simplest Brands, as well as a Top 10 ranking for brands in the United States. Netflix, ALDI and Google top the worldwide rankings:

  • #1. Netflix
  • #2. ALDI
  • #3. Google
  • #4. Lidl
  • #5. Carrefour
  • #6. McDonald’s
  • #7. Trivago
  • #8. Spotify
  • #9. Uniqlo
  • #10. Subway

Explaining how several of the key brands made it to the pinnacle, S+G reported the following:

  • Netflix achieved top spot for the first time, thanks to its ease of experience allowing users to stream, pause and resume viewing without commercials or commitments.
  • ALDI scores well because they surpass big-box competitors with their clear communications, affordable prices, and premium private-label products.

U.S. Brand Simplicity Rankings are Different

Not surprisingly, S+G’s Top 10 list of the simplest brands looks different from a purely American perspective, with just four brands ranking in the Top 10 on both the USA and world lists. Here are the top-performing brands based on just American respondents:

  • #1. Lyft
  • #2. Spotify
  • #3. Amazon
  • #4. Costco Wholesale
  • #5. Subway
  • #6. Google
  • #7. McDonald’s
  • #8. KFC
  • #9. Southwest Airlines
  • #10 Zappos

What’s also interesting is what kinds of brands aren’t showing up on the Top Ten lists. News and social media industry participants aren’t ranking well – think platforms like Facebook, Twitter and LinkedIn and broadcast networks like CNN, NBC and ABC.

Also failing to show up are brands operating in industries that are steeped in complexity – fields like car rental services, insurance services and the worst one of all, TV/cable and other telecommunications brands.

The S+G report concludes by stating companies and brands “benefit greatly by keeping it simple for customers … or [they] suffer the consequences.” Moreover, companies that are operating in highly competitive marketplaces can cut through and rise to the top based on their brand simplicity.

More information about the Siegel+Gale research findings can be accessed here.

What about you?  Which brands would you classify as particularly noteworthy in their simplicity appeal? Please share your thoughtss with other readers.

When companies and brands take a stand on “issues,” here’s a quick way to weigh the potential implications.

In recent years, companies and brands have found it increasingly difficult to navigate the PR waters in a politically polarized environment.

On the one hand, companies want to be seen as progressive and inclusive organizations.  On the other, there is concern about coming off as too controversial.

The environment is about as toxic as it’s ever been. In the “good old days,” companies were able to merrily avoid controversy by supporting universally agreed-upon “benign” causes.  But whereas in the 1970s or 1980s, celebrating Christmas or financially supporting the city’s symphony orchestra or fine art gallery was never faulted, today the situation is different.

Acknowledging a religious holiday risks criticism about offending non-believers or shortchanging people of other spiritual faiths. And dishing out dollars in support of “high culture” invites barbs about the need to divert those resources to more “socially woke” initiatives and away from “high culture” pursuits that speak to only a small slice of the general public.

The recent controversy with Nike and its Colin Kaepernick-inspired “Just Do It” campaign is another case in point. It may be a bit of a coin toss, but the conventional view is that Nike’s campaign was, on balance, a modest victory for the company in that more of the public was favorably disposed to it than put off by it.  And after a momentary dip in Nike’s share price, the stock recovered and ended up higher.

Less successful was Target’s move to direct its employees to forego wishing customers “Merry Christmas,” and instead use the more generic “Happy Holidays” greeting. Target decided to be “out front” with this issue compared to competitors like Wal-Mart.  But after several years of gamely attempting to enforce this guideline in the wake of negative customer reaction and a barrage of bad press on the talk shows, Target finally relented, quietly reverting to the traditional Xmas greeting.

Simply put, in the current cultural environment there are more risk-and-reward issues for brands than ever — and what actually happens as a result is often unpredictable.

And yet … surveys show that many consumers want brands to take overt stands on hot-button issues of the day.  Sometimes brands are just as criticized for not taking a stand on those very same hot-button issues — such as whether to adopt gun-free zones in office and retail spaces or deciding what kind of gun-related merchandise will be prohibited from being sold in their stores.

To deal with this increasingly gnarly challenge, recently the marketing technology company 4C Insights developed a “decision tree” exercise that’s elegantly simple. It’s a great “back of the napkin” way for a company to weigh the potential upside and downside factors of taking a stand on a socio-political issue that could potentially impact product sales, corporate reputation, or the company’s share price.

Here’s the 4C Insights cheat-sheet:

To my mind, the 4C Insights decision tree can be applied equally well to weighing a potentially controversial social or cultural issue in addition to a political one.

Indeed, it should be a ready-reference for any PR and marketing professional to pull out whenever issues of this kind come up for discussion.

In this environment, my guess is that it would be referenced quite frequently.

For brand loyalty … follow the money.

When it comes to brand loyalty, are we mercenaries? Loyalists?  Cultists?

Or maybe we’re just lazy?

With major brands spending billions of dollars each year using various strategies to build and keep brand loyalty, these questions are important.

Recently-published consumer research by Maritz Motivation Solutions and Wise Marketer Group seeks to get to the nub of the issue.

Maritz/Wise surveyed nearly 2,100 American adults age 18 and over via online questionnaires and consumer research panels. The respondents were filtered to include purchase decision-makers or key influencers within one or more of six major consumer categories:

  • Airline travel
  • Banking services
  • Credit card services
  • Hotels/lodging
  • Restaurants
  • Specialty retails

The results of the research reveal that brand loyalty isn’t one monolithic mindset, but consumers tend to fall into one of four categories, as follows:

  • “Mercenaries” – Loyal to brands that pay them to be loyal: ~55% of respondents
  • “True loyalists” – Stay true to a brand because people connect with it above and beyond any explicit incentives to do so: ~30%
  • “Sloths” – Can’t be bothered to switch brands due to inertia: ~8%
  • “Cultists” – The brand represents their personal identity: ~7%

What the Maritz/Wise research also tells us is where people come down on brand loyalty attributes is based more on attitudinal characteristics than something that can be segmented easily based on conventional demographics.

In other words, brand loyalty characteristics aren’t driven by age, gender or income level; mercenaries and cultists are found in their expected proportions across the spectrum of loyalty.

In another finding, when it comes to the “transactional” nature of brand loyalty, the research discovered that the “art of the deal” is based on money.

Gift cards, cash-back and credits are overwhelmingly preferred forms of reward for brand loyalty – and these apply to everyone no matter where they may land on the brand loyalty spectrum.

So, the next time we hear the old saw that “money can’t buy love” … we all know that the truth is a bit more nuanced.

PR Practices: WOM Still Wins in the End

These days, there are more ways than ever to publicize a product or service so as to increase its popularity and its sales.

And yet … the type of thing most likely to convince someone to try a new product – or to change a brand – is a reference or endorsement from someone they know and trust.

Omnichannel marketing promotions firm YA conducted research in 2016 with ~1,000 American adults (age 18+) that quantifies what many have long suspected: ~85% of respondents reported that they are more likely to purchase a product or service if it is recommended by someone they know.

A similarly high percentage — 76% — reported that an endorsement from such a person would cause them to choose one brand over another.

Most important of all, ~38% of respondents reported that when researching product or services, a referral from a friend is the source of information they trust the most.  No other source comes close.

This means that online reviews, news reports and advertising – all of which have some impact – aren’t nearly as important as the opinions of friends, colleagues or family members.

… Even if those friends aren’t experts in the topic!

It boils down to this:  The level of trust between people has a greater bearing on purchase decisions because consumers value the opinion of people they know.

Likewise, the survey respondents exhibited a willingness to make referrals of products and services, with more than 90% reporting that they give referrals when they like a product. But a far lower percentage — ~22% — have actually participated in formal refer-a-friend programs.

This seems like it could be an opportunity for brands to create dedicated referral programs, wherein those who participate are rewarded for their involvement.

The key here is harnessing the referrers as “troops” in the campaign, so as to attract a larger share of referral business and where the opportunities are strongest — and tracking the results carefully, of course.