Read The Times Australia

Daily Bulletin

Phantom brands haunting our supermarket shelves as home brand in disguise

  • Written by: Gary Mortimer, Associate Professor, Queensland University of Technology

There was a time when shoppers could easily differentiate between supermarket private labels and proprietary branded products, however new “phantom brands” appearing on supermarket shelves are clouding the waters. These are private supermarket label products without any reference to the supermarket’s brand or logo.

Despite significant improvements in the quality of private label ranges, supermarkets still face the challenge convincing customers of value perceptions. While supermarket private label ranges generally offer low price; low price is frequently associated with lower quality, and therefore less value.

Phantom brands are a way for supermarkets to overcome this challenge. While this strategy provides significant benefits to supermarkets, it comes with the inherent risk that shoppers may feel duped into buying a brand, which is not really a brand.

How supermarkets communicate the introduction of these new brands will be vitally important to their success.

Woolworths the latest to try this

The introduction of phantom brands by Australia’s largest food retailer, Woolworths, is a strategic move away from the deepening price wars and offers many commercial benefits. Firstly, such brands will attract a new shopper who is seeking value and willing to pay a little more for a better quality product, while existing Woolworths Essentials products will continue to satisfy the budget shopper.

Secondly, new brand names like Your Majesty Cat Food, Apollo Dog Food, Bell Farms and Baxter’s will give the impression there is a greater choice within the store. Supermarkets expect shoppers will welcome more choice and these new brands.

Thirdly, as these new phantom brands are essentially supermarket-owned brands, higher profits should be achieved. It also allows Woolworths to capture a larger slice of category sales where private labels have traditionally had little penetration, like health and beauty, haircare, pet food and baby needs.

The risk Woolworths will face is in communicating the launch of such brands. While shoppers understand the Aldi offer, brands that aren’t really brands, they may feel with Woolworths they’ve been duded into buying a brand.

Why phantom brands work

As grocery shopping remains a mostly low involvement, routine shopping task, consumers will employ simple strategies to reduce time and cognitive effort. This involves often referring to only brand or price, to determine quality and value and aid in selection.

Supermarket shoppers presented with proprietary brands think higher priced means excellent quality and good value. At the other end of the spectrum, shoppers also encounter supermarket private label products and reason that lower price means acceptable quality and better value.

Phantom brands combine these two different sets of logic. Priced a little higher than supermarket private labels, but under national branded products, shoppers will perceive this new brand as moderately priced, quality comparable to the leading brand and therefore, excellent value.

Aldi provides an excellent example of this strategy at work. Aldi’s private label ranges do not carry the Aldi moniker, instead a wide range of “exclusive” brand names like, Lacura Skincare, Choceur Finest European Chocolate, Belmont Biscuits and Mamia Baby.

image Two brands of cereal, one phantom brand, one name brand. Choice/Allprices.com.au

Aldi’s private label ranges mimic the packaging of nationally branded products – take a look at Aldi’s copy of Kellogg’s Nutri-Grain called Power-Grain or its Sunny Crumpets, that look remarkably like Tip Tops’ Golden Crumpets. Such phantom brands infer perceptions of quality as packaging is comparable to the proprietary brands. Aldi’s low prices then create the perception of value.

Private label growth and its challenges

Australian shoppers have warmed to the supermarkets’ private label products. Research by market research company Canstar Blue earlier this year found the number of Australians who purchased private label groceries rose from 44% to 65% in the space of just six months.

Market research firm Nielsen estimates supermarket revenue growth will come mostly from private label products. In comparable markets like the UK, the proportion of private label sales is almost at parity with national branded products and across Europe.

Despite shoppers’ apparent appetite for private label products, there is still a stigma attached to buying private label. Much of this stigma stems from history, as supermarket private labels evolved from no name generic products.

Ultimately, there are supermarket categories where private label simply doesn’t work, like confectionery, baby food, health and hygiene, haircare. Such categories are dominated by market leaders, Coke (with 53% market share) and Cadbury (with 30% market share). Phantom brands will fill this space between private and proprietary brands.

Aldi’s entry into the Australian market in 2001 changed the way shoppers looked at private label products. While Woolworths Homebrand and Coles Smart Buys were generally seen as cheap, if not cheaper than similar Aldi products, consumers considered the quality of these no-name generics to be substandard.

As a result, supermarkets implemented a “good, better, best” strategy for private labels. This is all despite the recent efforts of the big two supermarkets to re-launch their private label ranges by essentially removing this bottom rung of no-name generics.

Even the supermarkets’ very best offers, Select and Finest, are still adorned with the supermarket brand and logo. Where these current private label ranges fall short of convincing skeptical shoppers of quality and value, phantom brands will succeed.

Authors: Gary Mortimer, Associate Professor, Queensland University of Technology

Read more http://theconversation.com/phantom-brands-haunting-our-supermarket-shelves-as-home-brand-in-disguise-67774

Business News

The Rise of Digital Marketplaces in the Australian Trade Sector

For decades, the Australian trade and construction sector operated almost entirely on word-of-mouth recommendations and local community networks. Small business owners typically relied on local newspa...

Daily Bulletin - avatar Daily Bulletin

How Immigration Lawyers Can Help

Introduction Visa decisions can shape employment, family life, study plans, travel, and future residence. A small omission can lead to delay, added expense, or refusal. Immigration lawyers assess l...

Daily Bulletin - avatar Daily Bulletin

How Industrial Drying Equipment Supports Efficient Processing

Many industrial processes require moisture to be removed from compressed air, products or process materials before they move to the next stage. Excess moisture can affect equipment performance, produc...

Daily Bulletin - avatar Daily Bulletin

Practical Ways a Whiteboard Can Improve Workplace Communication

Effective communication helps teams stay organised, share ideas and keep track of important information. While digital tools are now common in many workplaces, a whiteboard continues to provide a simp...

Daily Bulletin - avatar Daily Bulletin

Designing Eco-Friendly Custom Water Bottles for Your Next Event

The Evolution of Sustainable Event Merchandise Event planning has undergone a massive transformation over the last decade. Gone are the days when organizers could hand out cheap, single use plastic...

Daily Bulletin - avatar Daily Bulletin

Why Choosing a Professional Florist Melbourne Makes Flower Delivery Impactful

Flowers have a great power to speak when humans cannot express their feelings with right words. Flowers are the best gifts when you are celebrating a birthday or welcoming a newborn child into your fa...

Daily Bulletin - avatar Daily Bulletin

The Business Case for Choosing Australian Fabricators Over Imported Alternatives

For a long time, you might have defaulted to overseas suppliers when sourcing fabricated metal components for a project. The unit price was lower on paper, and the maths seemed straightforward. That...

Daily Bulletin - avatar Daily Bulletin

Australian organisations are relying on business continuity plans built for a far more predictable world

Tariff escalations, supply chain fragility, geopolitical events, and the ongoing threat of cyber disruption have reshaped the risk environment facing Australian organisations. The problem is that ma...

Daily Bulletin - avatar Daily Bulletin

How to Rent a Car for Uber in Melbourne: What Every New Driver Needs to Know

Starting out as an Uber driver in Melbourne is not as complicated as it sounds but getting the vehicle right is where most new drivers get stuck. Uber has strict requirements around vehicle age, condi...

Daily Bulletin - avatar Daily Bulletin

The Daily Magazine

What Businesses Can Do to Make Sustainability More Practical Day to Day

Sustainability can sound like a huge corporate project, something tied to annual reports, long-term ...

The Hidden Logistics Behind a Smooth-Running Construction Site

A construction site can look chaotic from the outside. There are machines moving in different direct...

When a Temporary Work Arrangement Starts Looking More Permanent

A lot can change once someone has spent a few years working in the same place. What began as a fixed...

The Real Cost of Launching a Food, Beverage or Supplement Brand in Australia

"How much will it cost to manufacture my product?" is usually the first question a founder asks, a...

Why Aussie Car Owners Are Switching to Paint Protection Film Over Traditional Waxing

For decades, a tin of carnauba wax and a Sunday afternoon were the standard formula for keeping a ...

How Wide Should Running Shoes Be? Signs Your Shoes Are Too Narrow

Running shoes should be wide enough for the forefoot and toes to sit naturally under load, but not...

Trail Running Shoes vs Hiking Shoes: Which Is Better for Australian Trails?

Australia does not offer one neat definition of a “trail.” A weekend walk might mean a hard-packed...

Architectural Window Shading: Solutions for Triangle Blinds, Raked Glazing, and High Ceilings

Mastering Light and Privacy with Specialized Window Coverings Modern architectural de...

From Suburban Streets to Modern Events: Why Australians Still Love the Ice Cream Truck

Did you know Australia consistently ranks among the world's highest ice cream-consuming countries? ...