Allow Prestige for Store Brands

The Private Label Manufacturing Association is happy. Retailer revenue from store brands continues to increase. Using data from The Nielsen Company, PLMA estimates that sales increased by about 2% during year 2010. This is good news, since a reversal of previously high growth was expected. In drug stores, sales of store brands have almost doubled over the past decade.
     Stocking private label goods—store brands—gives you advantages over carrying only nationally advertised brands. Retail profit margins are usually higher, even if you’re offering a better price to the customer.
     But you might set a somewhat lower, not significantly lower, price on the store brand than on the nationally advertised brand. According to the principles of the price-quality link, consumers are more likely to accept a store brand as being of high quality when the price is comparable to the nationally-advertised brand.
     To keep that profit margin higher, allow shoppers to give prestige to store brands. Consumers are ready for this. A survey commissioned by PMLA and conducted by GfK/Roper concluded that 80% of U.S. consumers believe the store brands they choose to buy are either equal in quality or better than the corresponding national brands.
     Past research does indicate that some cultural groups avoid private labels in certain product categories. Research based at University of Memphis suggests that African-American consumers tend to steer away from private label brands in clothing, particularly boys’ clothing, because the private label lacks the cachet of widely advertised brands. Other research finds that Asian-Americans expect much more information about product features and consumer ratings when considering house brands than when considering national brands.
     To build the prestige, advertise the store brands and feature them in social media channels likely to be seen by people who are both in your target market and are members of the cultural group.
     When you’ve store brands that cross product categories, using a similar package design to build brand image is a good idea from a shopper psychology perspective. Mere familiarity brings credibility. Research findings from Wake Forest University and University of North Carolina–Greensboro do suggest that you place products with the same package design in different relative shelf positions for different product categories.
     For instance, with the mouthwash, the house brand is to the top left of the other brands, while with the toothpaste, the house brand is to the bottom right of the other brands.

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