Private Label CPG Marketers to Change Advertising

Mon Oct 2, 2017

Kathy Crosett

Marketers have spent decades building brand awareness and recognition in the consumer packaged brandsgoods category. During the recession, consumers shifted their CPG spending to private label brands, primarily to save money. How are well-known CPG brands faring this year? The Integer Group took a look and has the following advice for your clients.

The Checkout 2017 report from the Integer Group polled over 1,200 U.S. consumers about their attitudes on name brand versus private label or store brand CPG products. Consumers say the following about private label products. (The answers from two years ago appear in parentheses.)

  • Better price: 66% (74%)
  • Store brand is good enough: 49% (49%)
  • Store brand is equal to or better quality than name brand 44% (48%)

With fewer consumers believing that store brand products offer a cost savings, name brand advertisers are in a stronger position. Analysts encourage name brand advertisers to keep spending to boost image. Stores, on the other hand, may have to develop new advertising to emphasize features other than price to increase sales of their private brands.

Shoppers also appear to trust name brands more. This year, 46% of surveyed shoppers say name brands are more reliable than the private label optioins. Thirty-seven percent say the packaging is better and 55% count on name brands to lead the way with more variety and innovation. These numbers are all higher than they were two years ago.

Only 15% of consumers say they are buying more private label brands this year and will stick with them in the future, while 18% said the same two years ago. And, only 8% say they currently buy more of these products and will buy more in the future, compared to 12% who said the same in 2015.

While private label brands are feeling the squeeze from their more established competitors, there is trouble on another front. Earlier this year, Nielsen reported that 20% of fast-moving consumer goods are store brands. Millennial shoppers are likely to buy store brand FMCG products and account for some of the past growth in this category. However, as that group turns more to online shopping and to using voice-activated assistants such as Alexa, which specifically recommends Amazon’s private label products, store brands should take note.

Reps may want to suggest bigger ad campaigns and strategies to highlight the best features of store brands to help clients maintain market share.

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About Kathy Crosett

Kathy is the Research Director for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel.

View all posts by Kathy Crosett