An Update on the Battle of the Brands
Posted by joe
The battle of the brands is the “competition between dealer brands and manufacturer brand” (from our text books) over which will be more popular. Dealer brands, sometimes called private labels, are brands created by store chains (for example Safeway’s O Organics line of organic foods) and manufacturer brands are created by a producer (General Mills Cheerios). Dealer brands have been gaining share — boosted recently by economic downturn induced consumer price sensitivity.
This Bloomberg Businessweek article “Why Grocers Are Boosting Private Labels,” gives an update and some great examples. Dealer brands used to differentiate on price and then more recently offered comparable and sometimes higher quality. Now many retailers are adding brand managers and investing in more aggressive promotion. Surprising fact: in 2009, 8.7% of food and nonalcoholic drink new products were private label – by 2011 the number more than tripled to 31.4%.
What do you think of this trend? Will it continue? Have you noticed more aggressive promotion from dealer brands?
Tags: Branding
This entry was posted on Tuesday, November 29th, 2011 at 4:33 pm and is filed under Product, Promotion, Retailing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
I think that competition between dealer brands and manufacturer brands will continue to increase. Years ago there was an opinion that unknown dealer brands were of lower quality and didn’t taste as good, but now that opinion is starting to change. As grocery stores put more money into advertising their products and upgrading their labels more and more consumers are willing to give them a try. Consumers are more willing to try lesser known brands now that the economy is struggling because they are looking for cheaper options. I believe that this booming dealer brand trend will only grow, unless the dealers raise their prices and are no longer cheaper than the manufacturer brands. The most important aspect of this trend is that dealer brands are recognizable, but still cheaper. I think that without the price difference consumers will always gravitate to the product they have been aware of their whole life. When given the option between Honey Nut Cheerios and Safeway “Honey pecan O’s” I believe that without a price difference consumers will always choose the Cheerios because those have been mass advertised as long as anyone can remember.
November 29th, 2011 at 7:17 pmAs long as dealer brands continue to sell their products for cheaper than the manufacturer brands do, the trend of more and more consumers buying the dealer brands will continue. I usually shop at King Soopers, which carries Kroger brands and I have absolutely seen an increase in the amount of products they offer and the quality of the products. I generally buy the dealer brand, mainly because of the price difference from the manufacturer brand. However, if I was in a better economic situation or was willing to spend the extra cash, I probably would gravitate towards the manufacturer brand because those are the brands I have been aware of longer because of their more expansive advertising campaigns. I have seen an increase in the aggressiveness of the promotion for dealer brands; they still are not anywhere close to that of the manufacturer brands, but they have been getting closer, and I would not be surprised to see that gap continue to narrow over the coming years.
November 29th, 2011 at 9:37 pmI think that as long as money is tight for consumers and the dealer brands continue to be cheaper than manufacturing brands, the trend will continue to increase. The products usually do not differ a great amount, so when their is a significantly cheaper option, consumers will continue to buy the cheaper one. When the economy turns around, or when consumers have more money, I think that they will buy more manufacturer brands because they are able to. I have also noticed not only a lot more promotion of dealer brands, but simply the quantity of dealer brands increasing. The number and types of dealer brands have increased significantly since the recession, most likely because demand for the cheaper options have increased. I think that if this demand drops, manufacturer brands will become more popular and dealer brands will decrease.
November 29th, 2011 at 10:01 pmI believe dealer brands are more popular now than ever before. This is mainly due to the recent economic downturn but other factors have played their part as well. Many people are realizing that the quality of the products that dealer brands sell are close to or, in some cases, the same as manufacturer brands. If people can get the same quality product for cheaper, why would they go for the more expensive? The only reason would be advertising. Manufacturer brands will still thrive due to their great advertising. When the economy picks back up, dealer brands will see a drop in sales but not as much a you would think. People have learned to be more thrifty in the past years and I think this trend will continue after the economy is back on its feet.
November 30th, 2011 at 10:10 amI think that the trend in dealer brands will definately continue to grow. Dealer brands have an advantage because they are being sold directly in the store of the company the are manufactured from. With the example of O organics from Safeway, that brand has the advantage of seeing first had what the most popular organic items are in Safeway and focusing on those, without having to do too much research, They also can compare prices easily with other organics brands in the store and try to make their prices just a little bit below the competition. Dealer brands are a popular thing especially in this economy because dealer brands are usually cheaper than manufacturer brands. For this reason I think dealer brands will only continue to grow and become more popular.
November 30th, 2011 at 10:23 amI think that as long as the quality of dealer brands can continue to compete with other products, it’s popularity will continue to increase. However, once dealer brands realize that their products are becoming popular, they may attempt to slowly raise the prices to increase profit and then the attractiveness of the lower price would disappear. I think that it would be smartest for dealer brands to continue to sell at a lower price than name brands and attempt to increase their market share. If the quality of, for example, the Safeway’s organic line “O” can offer the same quality as say Kashi, a popular, yet more expensive organic line of products, there is no reason why people wouldn’t tend to buy “O” over Kashi. Especially during the economic slump that we’re in right now, quality items with a reasonably lower price will continually increase in popularity. I believe that the 33.4% of products being private label will steadily increase over the next few years.
November 30th, 2011 at 11:11 amI am almost always open to buying a dealer brand to save some money but I only continue to purchase that brand if I feel I am getting the same quality as the manufacturer brand. We shop at Safeway for most of our groceries and enjoy many products of Safeway’s dealer brands though there are some we have tried and did not like so we go with the manufacturer brand. Bottom line for us is we like to save money but do not want to sacrifice quality to do so. I feel the dealers can continue to find success with their own brands if they are able to produce a product that can offer the same quality of the manufacturer brands at a savings to the consumer. As for promotion it does seem like the dealer brands at Safeway seem to be on sale more often than the manufacturer brands.
November 30th, 2011 at 3:41 pmI believe as long as the economy continues to suffer, the trend for more dealer brands will continue to grow. Right now the dealer brands seem more appealing because it closely matches the quality of the other products for a lower price which is attractive to all those people who are hurting from the economy and looking to save money. However, when the economy turns around I believe dealer brands will become less of a trend for consumers will be more interested in the quality of the product versus saving a few dollars. I think the trend right now is great from a consumer perspective because it brings down the prices of the competing products which translates into more quality for your buck. As a consumer I have definitily experiences more
November 30th, 2011 at 4:40 pmThis article about grocers boosting their private labels brought up some very interesting points. The first point that I found to be somewhat surprising is that bargain hunters are becoming increasingly disloyal to brands. Brand loyalty is a very important aspect of marketing and plays a role in driving competition. Grocers are taking advantage of this decline in brand loyalty and looking for ways to increase their market share and to gain a new market of customers. When Safeway assembled a meal for several hundred people they were introducing their product to the market. They were looking to acquire a new image for their brand name. Grocers like Safeway are increasing their market share at an alarming rate. From 2010 to 2011 grocers doubled their market share for new food and beverage items introduced into the market. Companies like Safeway are creating their own brand loyalty with this increase in market share. They are improving their products while still keeping them at a reasonable price. Grocer’s generic products are becoming an increasingly recognized competition and they continue to add new products to their product lines on a regular basis. With trends like these, we may eventually see companies like Safeway take over the food and beverage market completely.
November 30th, 2011 at 4:42 pmI believe as long as the economy continues to suffer, the trend for more dealer brands will continue to grow. Right now the dealer brands seem more appealing because it closely matches the quality of the other products for a lower price which is attractive to all those people who are hurting from the economy and looking to save money. However, when the economy turns around I believe dealer brands will become less of a trend for consumers will be more interested in the quality of the product versus saving a few dollars. I think the trend right now is great from a consumer perspective because it brings down the prices of the competing products which translates into more quality for your buck. As a consumer I have definitely experiences more aggressive promotions from dealer brands and tend to purchase them over the other leading brands because it saves me money and I don’t really notice a huge difference in quality.
November 30th, 2011 at 4:43 pmI think that people are finally realizing that dealer brands are good quality and it’s a huge bonus that they’re usually significantly cheaper. Maybe our society is done being ‘snobby’ about what kind of cereal or chips they eat because the truth is, they’re all very much the same. I mean you still can’t stray from the Charmin toilet paper but Kroger, to me, is a dealer brand and has a lot of quality products. I was just in Illinois and there was a Kroger grocery store, which was their high end grocery store. Generic or non-generic, you just have to try things out before you make an assumption about its quality, it may not have a pretty label but it tastes the same inside!
November 30th, 2011 at 6:11 pmI think that the trend will continue to grow and that dealer brands will continue to gain a share in many different areas of consumer goods. I think that this trend is a very positive one because it will force manufacturer brands to become more aware of the prices that they are charging to consumers. With all of the dealer brands becoming more popular the price difference between dealer and manufacturer will become relatively similar. I think that a big push in this trend is the economic state of the US. If the economy was still good then people would not be as price sensitive as they are now. Dealer brands are actually good quality they just get a bad reputation because people are more worried about what brand they are buying over the quality they are actually paying for. In supermarkets you can see that more of the dealer brands are getting more shelf space because they are selling faster than the manufacturing brands. In grocery stores when you buy a steak it came from the same place whether or not it is a dealer brand or a manufacturing brand, all you have to decide is how much you want to pay for the same thing.
November 30th, 2011 at 8:38 pmI think dealer brands will continue to gain market share against manufacturer brands. People have learned that price does not always indicate quality and have found that dealer brands often provide equal or higher quality at lower prices. This will continue until manufacturer brands either find a way to lower their prices or to increase quality. Then manufacturer brands will also have to convince consumers to buy their products again.
December 1st, 2011 at 9:05 amDealer brands give consumers an almost identical product for usually half the price. I have grown up in a household that only purchases Safeway Select brands. Now on my own I continue to purchases these products because not only is it what I have grown up on but why not make affordable choices. The downturn of the economy has increased the demand for these products giving dealer brands a larger market share than ever before. For the first time we are seeing brand disloyalty and name brands are fighting for their market share. Unfortunately for name brands I believe that when the economy does turn around this trend will not change. Consumers are realizing that buying name brand grocery products does not give them any added benefits. I do not feel that this trend will shift in the fashion world but food producers are realizing that if consumers do not immediately see “Something of Value” in their product over dealer brands they are going to purchase the less expensive good.
December 1st, 2011 at 12:55 pmI believe that this trend will continue until the economy starts to bounce back. Personally I have been able to observe the pattern with King Soopers private lable Kroger from being an employee there. Sales have significantly increased over the past couple of years and King Sooper has recently implemented a system called NuVal, which I think will continue to boast the sales. NuVal is a nutritional value score that is assigned to every product in King Soopers. Simply they divide the “good” ingredients by the “bad” ones, to get a score between 1-100 on how nutritious the product is. Customers have been suprised to find that the Kroger private lable products are usually the same score if not higher than the manufactured brands and almost every instance are cheaper. Now Kroger products are starting to reach the health concious customers as well has the lower income market.
December 1st, 2011 at 4:15 pmI think that it was a good move for dealer brands to invest in brand managers and more aggressive advertising. With today’s economy, many consumers have become increasingly more price sensitive. Customers are begging to realize that dealer brands have the same quality and value as manufacturer brands, but at a lower cost. Advertising of the dealer brands are making them more visible to the consumer and that is why the percentage is rising of food and nonalcoholic drink new products coming from dealer brands. The manufacturer brands in turn are receiving increased competition from these dealer brands.
December 2nd, 2011 at 1:13 pmWhat do you think of this trend? Will it continue? Have you noticed more aggressive promotion from dealer brands?
I believe that this trend is in favor of the consumer and that It means that people are becoming more thrifty shoppers, that are begining to realize that there is not a huge difference between generic and brand products. I believe that even as the economy improves that this trend will conitnue and even expand. If you are getting the same exact indregients in your food why pay more for a name brand? Yes, recently I have noticed that dealer brands have been adevetising more, as they probably realize as well that they have a growing customer base.
December 2nd, 2011 at 1:39 pm