In Lexington’s WalMart, a 300-pill bottle of low-dose aspirin illustrates the dichotomy between name brand and store brand strategies. The generic store brand, Equate, rings up almost 74 percent less than Bayer’s low-dose bottle. When both boxes advertise the same active ingredient, it makes perfect sense to choose the store brand – and save more than $10. But not all customers will. Store brands, or those like WalMart’s Equate and Great Value, Whole Foods’ 365 Everyday Value and Target’s Archer Farms, employ a unique strategy for success by purposely ramping up marketing and production during economic downturns and targeting specific goods at specific groups. Name brands, such as Glad, Coca-Cola and Herbal Essences, rely on consistency in product quality and point-of-sale advantages.
When deciding between a name brand product and a store brand product, shoppers often perceive a trade-off. Would they rather pay more for high-quality Neutrogena face wash or pay less for CVS brand and assume a lower quality? But the decision between quality and thriftiness has become less prominent since the 90s. In recent decades, shoppers have moved away from the stigma that store brand products were of lesser value than name brand ones, allowing store brands to thrive. This success has been magnified by the recession in 2008. Store brand products that families buy regularly, like garbage bags, milk or paper towels, outperform name brands during tough economic times for obvious reasons – they cost less and the value lost is only marginal. According to Time Magazine, 93 percent of shoppers changed how they bought everyday items after the Great Recession. Though the recession brought hard times for millions of Americans, it led to a boon in the store brand market.
But as America digs itself out of the Great Recession and heads into more prosperous times, store brands will face competition from name brands as average and disposable incomes increase. In order to maintain their market share, store brands must continue to expand their breadth of products. Although this seems counterproductive, it increases consumers’ acceptance of the store brand as a whole. When shoppers see cream cheese, body lotion and pain reliever with a store brand, they tend to accept the brand at higher rates. Further, when those goods are proven high quality, customers will choose them time and again. Particularly important in proving store brand quality are medicines. As stated before, store brand aspirin products run a far lower price compared to name brand. When customers examine the back of the bottle, they see that the regulated products typically contain the same ingredients. The same goes for milk: as a regulated product, name brands and store brands must meet the same standards. If there is no difference in quality, customers looking to save a few bucks without sacrificing quality will pick the store brand. If these store brands can cement a customer base in these regulated products, they can gain a larger market share in other areas. In addition, store brands must implement another interesting strategy: marketing to men. According to Time, men are far less likely to stick to name brands, especially when buying health and beauty goods. While 74 percent of women prefer name brand beauty products, only 56 percent of men prefer to buy based on name brand.
In order to remain competitive, name brand product lines should treat their store brand competition just as they would another name brand. Since the gap in quality is shrinking, name brands must remain consistent in both product and brand quality. Since name brands already have what appears to be a running start based solely on quality perception, they must not lag in product excellence. Additionally, name brands are often perceived as better based on marketing. As CBS puts it, “In general, brand-name products are better than generic products. Or at least their marketing is.” And marketing works. According to the Harvard Business Review, name brand products sell better than store brand in the United States because of precise television marketing. In European markets with regulated television advertising, name brands are unable to reach the high level of advertising American brands reach and store brands often sell more. In addition, the quality assurance implement by name brands puts it ahead of store brands at the point of purchase. If a customer is in a hurry at the supermarket and does not have time to compare two types of shampoo but wants quality, he or she is more likely to choose the name brand, assuming it will be better quality.
There exist multiple advantages and disadvantages for both name and store brands, perhaps too many to detail in a short blog post. One interesting facet of brand strategy – that will hopefully appear in the comments section below – is the decision on behalf of name brand production facilities to produce store brand products. This does not always work out and can be toxic for the name brand. Further, the use of sales and promotions as a strategic plan can also affect name and store brands.