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How brands compete with private label competition in Australia

Thursday, October 18th, 2012

Here in Australia, the grocery retail landscape is tough. There
are two huge, fierce retail competitors dominating our grocery lives.

These retailers are tough on their supplier brands. In the next
4 to 5 years, retailers will have up to 30% of their own brands on shelf, which
means further supplier-branded product rationalizations.

Retailers have been driving shoppers to switch from their
preferred brand products to their own private label equivalents that come at a
lower price. Heinz has vocalized that the pressure from grocery retailers in
Australia
(among other things) is causing factory closures and forcing them to
move operations off-shore. But this sentiment appears to have cooled in recent
times.

How can supplier brands stand out in this environment, build
loyalty among shoppers, and lower the impact of the retailer strategy?

One method is through a consumer promotion. A formulaic
promotion, exclusive to a particular retailer, like giving away $100 gift cards,
will spike sales short-term, clear product, and nurture retail relationships. However,
this is not the long-term answer to achieving success as private label share
rises.

A great promotion has a strong idea, is creatively
interesting, and includes an element that leverages the particular product’s
attributes. Linking the product to the entry mechanic or incentive assists in
embedding the usage situation of the product in the shopper’s mind, encourages
them to delve deeper, and become more conscious of their relationship with the
brand.

The Mizone Zone Lab promotion is a great example of a
mechanic and incentive that builds on the product benefits and strongly
connects with the audience’s lifestyle interests. It also uses music in an
innovative way as part of the promotional incentive. Rather than simple music
downloads or concert tickets, the promotion takes shoppers along the journey of
music production as well as providing a functional benefit for their chosen
lifestyle activity. Awareness
around the promotion was built via TVCs with on-shelf impact created on-pack.

The great thing about the Zone Lab promotion was the repeat
purchase structure. If the behavior becomes engrained with the shoppers, it
puts Mizone at a great advantage over private label products. Please share other great brand promotions that accomplish similar goals.

Contributed by Luke Veale, Integer Australia.

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