If you’ve been following the news, and I’m sure you have, you’ve seen or read an article similar to this one which appeared Media Post, Blue Skies Ahead For Private Label.
Private-label packaged goods could surge as much as six times the roughly one-point market-share gain already seen since the recession began in December 2007, Jack Neff reports, bolstered by a slowdown in consumer spending that could last from four to 10 years.
This sounds scary, if you’ve been building your brand based on a green selling proposition. Then you come across something like piece, this from Ad Age, Private Label Winning the Battle of the Brands, and you wonder how you will survive.
Package-goods brands face their greatest crisis and strongest threat from private label since at least the early 1990s. And that’s the good news.
The fact is that consumers are more and more eschewing their favorite brands in favor or cheaper, private label versions of their favorite products. Many consumers have caught on and realized that the manufacturer of their favorite branded product is making their store’s private label product as well.
Why pay more, they reason, and maybe you do too, to get the same thing?
Why this matters to green and organic products, is that more and more, stores are offering their own brand of organic and green products. And so now green businesses face the same challenges and pressures with which major consumer package goods manufacturers have struggled for years – How to deal with private label.
The Natural Foods Expo West is coming up next week and I’m sure that will be a big topic of conversation. But take heart, I’ve been here before. I spent the last downturn rationalizing lines, developing promotions and creating recession-proof ways to build brands for both for a Fortune 100 company and for a mid-sized company. Both managed to grow their way through the recession. There is something you can do to avoid coming up the loser as consumers flock to private label.
1. If You Can’t Beat ‘Em; Join ‘Em – if your biggest account asks you to make a store branded product for them, say yes…please. They’ll come up with outrageous demands. They’ll ask you to sell them basically the same product under their brand name instead of yours…at a lower cost of course since you don’t have those enormous marketing expenses, right? Yes, you end up with a lower margin, but somebody’s going to do it for them – why not you?
2. BOGO Baby – Don’t give up on your flagship brand though, but do promote it as much as possible. Develop an annual promotional plan that benefits both you and your retail partners. Buy One; Get On Free promotions combined with promotional strategies that encourage increased usage (i.e. on-pack recipes or usage suggestions) keep consumers loyal and keep them coming back when they run out…even after the promotion is over.
3. Bonus Pack Bonanza – Since a high percentage of your total cost is in your package, why not offer your consumers a little more with each purchase? A popular strategy to battle private label products is to include more in the package while maintaining the price. “bonus 20% more” can be a very effective tactic.
4. Partner Up – Now is the time to seek out those complementary brands, preferably bigger that want to partner on a promotion. Cross-couponing can get your product added exposure beyond your core customer. If you can, include sampling events and POP. Now is not the time to skimp on your promotions budget, well executed promotions provide both a short term bump in sales and longer term, new loyal consumers.
5. Push Your USP – Your unique selling proposition, that is! Not the organic/green/good for the earth one, the one that makes you different from all other organic brands in your category. That’s also what differentiates you from your private label competition. If you operate as a 3P company, broadcast that fact – especially if your charitable facet has anything to do with helping others in need – everyone can relate to that about now.
There’s no guarantee in these uncertain times, but we’ve been here before and there are lots of tried and true marketing strategies to pursue, that you may not have tried up until this point . In an economic downturn, marketers turn to PR and promotional strategies, as well as, consider innovative ways to cut costs while maintaining value.
It’s time to switch gears. Luckily, it’s not rocket science – just good marketing.
Follow me on Twitter @mcmilker.
Photo credit: consumerist at Flickr Under Creative Commons License
We have a new Organic Bird Repellent we are bringing to market and are in process with OMRI for certification. Can you give me some ideas on how we might introduce the product to the Organic Market?
Thanks so much,
Steve