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Improved quality and packaging narrows gap between private and branded products
Consumers are becoming increasingly inquisitive about where their products are being manufactured. Private labels now have a similar quality to other renowned brands; and more consumers are now aware that many private label ‘generic brands’ foods are actually made by the same companies that produce higher priced name brands. Such Knowledge has aided growth in this sector.
As discussed in the MarketLine case study, Supermarket private labels: growth following economic downturn, supermarkets are changing consumer perception. Consumers are not having to compromise on the quality of products if they purchase cheaper alternatives to branded ranges. More and more consumers now trust private labels, and this helps improve their bottom line.
Originally, supermarket/private brands’ packaging designs were poor with basic print proclaiming only the generic name for items. This made consumers suspicious about the quality of a product, rather than reflecting lower prices or confirming their good value for money. Supermarkets have now changed their packaging to appeal to more consumers; a good design could contribute to a more appealing value for money proposal and also removes the stigma attached with poor packaging of ‘low quality’. Improved packaging has also extended to supermarkets’ basic ranges as they have become aware of the need to compete in this thriving market with the likes of Aldi and Lidl.
Supermarkets have even extended their own-label packaging to look very similar to branded products. This is an interesting marketing strategy as consumers may be more willing to purchase items which resembles branded product
Lookalikes are enticing consumers not only because of pricing strategy but also due to product positioning strategy. Supermarkets are taking advantage by launching their own segmented private labels. Many supermarkets have reaped the reward of copying branded products. For example, Aldi’s (a global discount supermarket chain) UK sales increased by 32% year on year; many products offered by Aldi look very similar to branded products. Aldi’s Choco rice, which is priced at £1.05 (approx. $1.64) for 375g (28p per 100g); not only resembles Kellogg’s Coco Pops, priced at £2.69 (approx. $4.20) (49p per 100g), but also has similar ingredients to Kellogg’s; with the main difference being the chocolate content.
If consumers can purchase cheaper products, without or minimizing compromising on the quality then they may not necessarily revert back to branded products if and when the economy recovers. This can potentially be damaging for major food brands.