Private Label's gunning for you--better keep moving ~ Brand Mix

Tuesday, February 23, 2010

Private Label's gunning for you--better keep moving

Butch Cassidy and the Sundance Kid chase sequence

This clip from Butch Cassidy and the Sundance Kid shows the start of one of the most famous (and longest) chases in film history. Whatever Butch and Sundance do, wherever they go, the Pinkertons keep on coming. They try hiding, riding double on a single horse and negotiating an amnesty. None of that works. They get some respite when they throw themselves from a canyon into a river but not for long. Eventually they decide their only option is to move to Bolivia (where they eventually get killed by another posse).

This chase sequence came to mind as I was reading this AdvertisingAge article about consumer packaged goods companies intentions to increase marketing spending to stay ahead of Private Label. Private Label, like the Pinkerton posse, is in hot pursuit, tracking and following every change of direction and taking out all those who stand still and do nothing.

Now to stretch this analogy to its breaking point, the various responses proposed by CPG companies can be categorized with reference to the movie: More coupon spending--that's like asking the horse to run faster. It's only going to work for a short time before the horse collapses. More media spending--will work for a bit longer because at least the horse is getting fed. While meaningful product innovation, that's the one that's like jumping off a cliff. It's more risky but, if successful, can give some breathing room. Just for a while.


Dennis Moons said...

Reading about this CPG company meet-up left me a bit confused.

Store brands don't or advertise very little. Doesn't an increase in advertising mainly affect the competition between national brands?

Martin, you wrote that coupons only have a short term effect. Is this a general thing or does the economy has something to do with it?
I thought that the coupon gave the consumer the opportunity to try out the product. Who then realizes that this premium prize indeed gets him more benefits. (in an ideal world!)

Martin Bishop said...


Thanks for commenting and sorry for being confusing. As to your points:

- I think that advertising plays a role for CPG companies vs. Private Label as well as vs. branded competition. At its best, advertising helps build brand equity which is then reflected in the price premium customers are prepared to pay.

- Coupons serve several purposes including getting people to try new products. But I think their primary role is to offer a temporary price discount to boost sales. That's the role that I think is only a short term effect because it gradually erodes the perceived value of the brand.

Hope that helps!

Blog Directory - Blogged