Raise Prestige of House Brand Premium Label

Consumers think differently about private label, house brands than national label brands.
     Researchers at Monash University explored the situation in which a retailer introduces a value version of a house brand to add to a premium version on the shelves. Here’s what happens:

• Prior to introduction of the value version, the premium version is likely to be considered by consumers to be of standard, not premium, quality. 
• After introduction of the value version, consumers’ quality assessments of the premium version increase. 
• If a premium version is introduced to an existing value version, the assessment of the value version doesn’t change noticeably. 
• The price consumers expect to pay varies directly with their perceptions of the quality. 

     On the other hand, researchers at Miami University and France’s ESSEC Business School found that addition on store shelves of a value version to a premium version of a national label product will lead to lower quality ratings of the premium version. The researchers used as examples the introduction by Charmin of a lower-quality Charmin Basic product and Foster’s Beer producing a lower-quality Foster’s Grog.
     In the current price-sensitive retail marketplace, it is good for you to make bargain alternatives available. At the same time, you want to preserve the quality image of items that yield higher per-unit profitability. The Miami/ESSEC findings and other research suggest ways to reduce the damage to the image of the higher-priced national brand alternative:

• Check that the value version does still competently fulfill functions the shopper is seeking. The price is lower, so the purchaser expects compromises. But if there is not sufficient value, do not carry the item.
• In ads and in-store selling, give shoppers examples of the breadth of product line you offer. This message encourages consumers to think of the bargain alternative as an opportunity to choose rather than as a reflection of the brand quality.
• Put more gusto behind the marketing of the better and best versions than behind marketing of the good, but bargain, version. Consumers have a natural tendency to credit the brand with characteristics of its best example. Support this tendency.
• Physically segregate the bargain version from the flagship version and any premium version. A stigma can rub off from cut-rate merchandise to other merchandise that is adjacent. 

Why the difference between house brands and national label brands? Much of it is due to the heavy manufacturer advertising for the nationals.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Insulate Bargain Alternatives’ Image Damage