Editor’s Note: This is the second installment of a three-part exploration of the OTC market.
As we saw in part one of this series, the economic downturn and recent recalls have given private label a boost over national brands. Most consumers have used and are comfortable with private label. While there are certain situations and conditions that can drive consumers to choose a familiar national brand over an unfamiliar private label, it is nonetheless becoming increasingly difficult for national brands to change the perception that private label is just as effective and usually costs less.
What can national brands do to defend against the private label challenge? Based on our internal qualitative research, we’ve identified 10 opportunities for national brands:
- Go Green: We know that consumers are willing to pay a premium for socially responsible and environmentally friendly products.
- Think Healthy: Moms are paying close attention to health-conscious ingredients, including chemical-free and dye-free products and are willing to pay more for what is best for their kids.
- Continue the Variety: People recognize the larger variety of symptom coverage, particularly in cold and flu, so continue innovating new varieties and choices for consumers.
- Tout Quality: Texture, concentration, coating, flavor/taste and packaging are all national brand pluses. Keep innovating in these areas.
- Promote Efficacy: There is a trust that exists for a known national brand—build on this aspect in advertising and communications.
- Price Competitively: The price threshold seems to be about $1-$3. Consumers will go for the national brand, if it is priced right.
- Promise Savings: Coupons and temporary discounts create an ‘act now’ moment for consumers to get the quality and trust of a national brand at a private label price.
- Target Travelers: National brands are more likely to be bought in places like airports, gas stations and foreign countries. When the need is urgent or people are under stress, the national brand is seen as the safe choice. Offer national brands in these venues.
- Be Honest about Recalls: In some cases, no damage appears to have been done if consumers feel they are being given information and told the truth about a recall. Honesty breeds trust.
- Differentiate in Aisle: Dosage/mg, identical ingredients and the ‘compare to’ signage are all things that consumers look for in aisle. The more national brands differentiate by varying dosage/mg or inactive ingredients, the less alike the private label becomes.
Our final post in this series will look at the strengths of private label and how it can continue its successful battle with national brands. In the meantime, please contact me if you’d like more information. Or, access the full report from our qualitative study.