Correlation Found Between Recognizable PL Brands and Consumer Satisfaction

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April 12, 2011

Consumers prefer certain private-label products over others, and some don’t even know they are purchasing private label brands, according to a new study by Market Force Information.

The panel research study, conducted in March with 6,100 participants, was designed to uncover which private label products consumers buy and whether they know they are actually buying private label, the Louisville, Colo. Research company reported.

Market Force’s customer satisfaction survey revealed a direct correlation between private label brand awareness and adoption. In grocery categories, consumers were most aware of private label dairy brands and were more likely to buy them than private label cereal and snacks, while cleaning supplies ranked low in awareness levels and purchases.

Walmart’s Great Value emerged as the most familiar private label brand across all categories.

Savvy Milk Buyers
Milk was the most popular and familiar of the private label categories studied by Market Force. Of the 84 percent who know their store sells private label milk, almost one-fifth said they buy it all of the time and 45 percent buy it some of the time. Interestingly, taste does not seem to play a significant role in consumers’ thirst for dairy, with only 7 percent citing it as a factor in their private label milk purchases. Price was the overriding purchase factor with 81 percent mentioning it, followed by value with 53 percent, and coupons and promotions earned 16 percent to rank as the third most important consideration.

Walmart’s Great Value brand was the most familiar among private label milk buyers, with 666 out of 4,808 respondents (14 percent) calling it out. In general, consumers were aware of a high number of private-label milk brands and could specifically name nine others in addition to Great Value.

“Walmart’s emphasis on its Great Value brand is paying off in both brand recognition and preference,” said Janet Eden-Harris, chief marketing officer for Market Force. “By pricing its private-label products 5 to 20 percent less than named brand products and putting serious marketing muscle behind its brand, Great Value now accounts for 10 percent of the chain’s food sales.”

Cereal Brand Awareness Low
While taste might not be a great concern with milk, it is a deal -breaker for many cereal buyers. More than 29 percent of survey participants said they never purchase private label cereal, compared with only 4 percent for milk.

Taste was the primary reason given for not purchasing the cereal. Out of the 71 percent who do purchase private label cereal, their top reasons for doing so echoes the milk category: price, value and promotions.

Private label brand recognition was also lower with cereal than it was with milk. When asked, consumers could only name nine specific private label cereal brands and only three of those didn’t include the store’s name. This could point to an awareness issue, since only 6 percent of those surveyed knew for certain that their store sells private label cereal, or it could be that consumers cannot discern the difference between private-label and national brands, according to researchers.

“We discovered that the distinction between private-label and named brands is fading for consumers and they may not even know that certain brands are private label,” said Eden-Harris. “This situation could pose some real challenges for the national brands who must maintain a distinct identity.”

With Snacks, Taste Matters
Shoppers aren’t quick to gobble up private label snacks such as chips and crackers either. More than half of survey respondents said they never purchase private label snacks, citing taste as the predominant reason. Other reasons given for steering clear of private-label snacks were a preference for name brand products, quality concerns and brand loyalty.

Meanwhile, price and value were the top two factors that drove others to purchase private label snacks, which researchers said corroborates a SymphonyIRI report that show 54 percent of consumers are buying snacks based on cost as opposed to brand.

The Market Force study revealed fairly low private-label snack brand recognition, with consumers capable of specifying only four brands that do not include the store name –– Great Value (Walmart), Kirkland (Costco), Clancy’s (Aldi) and Archer Farms (Target).

Cleaning Supplies
One of the biggest private-label industry pushes has been with eco-friendly cleaning supplies, but these efforts are not paying off in awareness or trust, the research found. More than one-third of respondents said they never buy private label cleaning products, primarily because they do not trust a new brand or because the quality is inferior.

However, this finding must be tempered by the fact that 40 percent – the highest percentage of any category – admitted not knowing if their store offers private label cleaning supplies. Likewise, those surveyed could only name 10 specific private-label cleaning brands, and many offered generic answers such as “Kroger” or “Target” or “HEB.”

Of those who do purchase private-label cleaning products, price and value again ranked as the highest influencers, while the absence of additives and the fact that the product was organic mattered to very few.

SBD Views: I find this unique piece of consumer research fascinating as it indicates that a clear connection between a retailer's banner and its store brand products support consumer adoption of store brands in many categories. Maybe European retailers and U.S. retailers like Wegmans appear to have it right with the clear association between their banner and their store brands products. The subject of European retailers approach to the branding of their store brands will be explored by Koen de Jong of IPLC at the upcoming Store Brands Decisions' Innovation and Marketing Summit on July 18-19. -- John Failla for Store Brands Decisions

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