The Road To Distinction

When the economy turns south, consumer spending takes the first hit. It starts with discretionary spending. That new plasma TV that looked so good last month just isn’t the draw it was only a few days ago. The number of trips to the store are curtailed. Then finally brand preference itself is challenged.

This is the time invisible (value) brands can not only survive, but thrive. There are generic brands, private-label store brands, and captive brands. All of which stand to benefit from economic downturns.

In fact, Walgreens recently announced that their Walgreens brands and their exclusive captive branded product lines increased sales by 15% last quarter. This is proof that when consumers question paying that “brand name” premium for the buying confidence, positive experiences, and comfort the high profile brands offer, it is the generic brands that stand to benefit.

Since many of the big brands also produce the private label generic products, in most cases they will keep their sales volume at the expense of their premium brand margins. These markets are controlled by the stores themselves, since they lack the branding and promotion of the premium brands. So what is the best way for marketers to kick-start their private label and captive brand sales.

Believe it or not, in-store sampling is probably the most powerful marketing tool in that exists. In a recent research study, 35% of consumers who tried a sample, bought the product during the same shopping trip. 58% of those then reported that they would buy the product again after trying it.

There is no other medium that can match those numbers, and while it is mostly brand name products doing the sampling, in my view that should change, as sampling can provide instant credibility and buying confidence to the generic brands.

This same survey divided the consumers into three segments: acquisitions (new to the product), conversions (those willing to buy after sampling), and retentions (those who had purchased the product before). 85% of retentions who sampled the product said they would purchase it again, compared to 60% of conversions. In total almost half (47%) said they would look to purchase it in the future.

But the true power of sampling was that a whopping 24% said they bought the product they sampled instead of the item they actually went to the store to purchase. That says volumes about the potential of private-label, and captive brands.

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