Winning the battle at the shelf: own versus premium brands

Grant Montague
Vice President - Europe - Perception Research Services

Own brands have travelled a long way in recent years, waving goodbye to their old positions as no-frills components of many retailers' business strategies. Perception Research Services investigates the current battle between own and premium brands, and outlines how packaging and labelling have become vital aspects for winning over consumers at point of sale.

Last year, in a study on private label purchasing in the UK, it was discovered that 30% more customers than in previous years are purchasing private labels, and 56% reported feeling positive about buying own label goods. With 89% of people questioned saying that the economic climate has affected their spending, it's no surprise that retailers have embraced own brands as a driver of profit and shopper loyalty. Retailers realise that own brands don't need to look cheap in order to convey value, nor do they need to mimic the appearance of national brands to suggest comparable quality.

Without question, the change in the retail landscape has placed an increased burden on national brands, which must work harder than ever to justify price premiums. In particular, they've been forced to raise the bar on packaging to compete with own brands at point of sale.

But how can brands stand out as premium products against this kind of point-of-sale competition? And what underpins persuading the consumer to pay a premium price, when your pack sits in a person's left hand and your competitor's in their right? Undoubtedly, packaging and the messages it sends are extremely important. In a recent study that investigated which design elements best gave beer a premium look, it was found that the top reason for a beer being named the 'most premium-looking' is not down to the bottle shape, size or colour, but the label.

Packaging - and more specifically, labelling - is the key to winning at shelf, and holds the secret of competing against own brands in the current market landscape. Many leading packaged goods companies are currently facing this challenge, leading to an upsurge in packaging innovation, and competition is at an all-time high. But there are four guiding principles, says Perception Research Services, that brands facing a private label threat should follow.

Distinctive visual assets
Many categories that feature a strong private label presence are frequent, habitual purchases in which shoppers typically don't invest a great deal of energy. In fact, Perception Research Services' in-store studies - carried out with PRS mobile eye-tracking - have consistently revealed that shoppers are largely 'on autopilot' in these aisles.
With low levels of comparison shopping and a high correlation between visibility and purchase, shoppers often buy the first brand that they actively consider. In these cluttered, low-engagement categories, people are looking for familiar visual cues (colours, icons, shapes, and so on) to help them "deselect" products and narrow down options.

An emotional connection
A second, related strategy is for national brands to leverage the power of their usage history and advertising budgets in the aisle. This doesn't necessarily require linking a product's packaging directly to the brand's latest promotional campaign, but it does involve evoking the underlying emotion behind the brand - typically via compelling visuals (such as the Pampers baby or the M&Ms characters) that focus on the end user or end benefit, rather than the product itself.

Point of difference
Beyond the visual and visceral levels, packaging also needs to differentiate and compete at the rational level. Specifically, it needs to give shoppers a reason to spend a bit more, as opposed to going with the lower-priced store brand.
Here, marketers often misstep in one of two ways. Either they rely solely on the power of branding to justify the price premium, and thereby fall short of the goal, or they clutter the packaging with too much messaging, which prevents the product from conveying a clear point of difference or superiority.

Add value via innovation
Finally, perhaps the most effective strategy is to change the value equation through the packaging's structure, functionality or sizing. New pack structures are not only inherently more proprietary and protectable than graphics, but they can also make a difference with shoppers on multiple levels - from the shelf to the usage experience - by influencing visibility, imagery, price/value perceptions, usage rates and more.
While marketers typically focus their attention on brand building through advertising, promotions and social media, the reality is that their brands will largely succeed (or fail) at the retail shelf, where most purchase decisions are made. At the shelf, they will find far stronger private label competitors than ever before, with more compelling packaging, better product quality and often a considerable pricing advantage. At this stage, own and premium brands alike need to step up their game in order to rise to the challenge.