So with all the private label and copycat brands available to consumers today, how do brands avoid parity on the shelf and still get cut through to make sales?
Copycats and private label killing your brand
Brands used to matter to the consumer much more than they do today. Even though they may claim to care about brands, consumers current shopping behaviours suggest otherwise. The ‘budget conscious shopper’ is not aligned particularly to any brand, rather their markers are perceived quality and price.
In response to this ‘non-loyalty’, the supermarkets are constantly upping the ante in their increasingly fierce bid to grab the brand agnostic consumer’s dollar. Supermarkets shelf test which branded products still matter to the consumer and which brands don’t, and they’ve discovered there are very few categories where brands really do matter.
So for them, this has been a green light to increase their private label and copycat branding strategy to achieve much higher margins and far greater control of their supplier base. The increase in fighter brands, private label and copycat brands all mean that brands are taking bigger and bigger revenue hits.
The value of branded product
Brands still exist because consumers equate the brand with quality and an emotional connection. Brand names simplify the selection process in cluttered product categories by providing the time poor consumer the assurance of quality & trust. This promise saves the shopper from having to inspect alternatives on the shelf.
In the past, supermarket “home” brands had a negative consumer perception and were widely regarded as cheap, inferior alternatives to the leading brands in the category, think Black & Gold. Whereas today, many supermarket brands have built trust with the consumer in their private label brands, which in many cases are on a par with many of the the brands consumers are most familiar with, in both quality and price. As a result many national brands are under constant pressure to differentiate themselves to on-shelf results. This is especially true for the number three brand in each of the product categories.
The Aldi phenomenon
One of the primary reasons Aldi keeps growing and grabbing market share from the major supermarket chains is because Aldi product packaging tends to reflect cues of the very brands we know and trust. They piggyback off our favorite brands, with “copycat“ like products at much lower prices and similar, and in some instances even better quality. Is it any wonder Aldi has grown the way it has?
In their bid to remain competitive with Aldi, the major supermarkets are discounting more and are also continuing to expand their range of both copycat and private label products, which has a knock-on effect for brands.
The democratization of brands
Not only have the major supermarkets felt the Aldi pinch due to their lack of clear differentiation between each other, but the brands themselves have also been suffering from the big reduction in customer loyalty.
With no clear point point of difference, and with the perception of product quality seeming to be homogeneous, today’s customer simply shops where they can either:
a) get the lowest price or
b) whichever store happens to be most convenient for them to shop at
It’s very rare that today’s consumer will drive to find their “must have” product. The copycats are duplicating the initial drivers of that trust by taking packaging cues from Australia’s most trusted brands. Example: Woolworths Cola has taken a similar shade of the iconic red of ‘Coke’ to help engender trust and remove barriers to purchase. This same copy catting can be seen in many categories across all the major supermarkets including Aldi.
How we shop
Consumers shop based on perceived value. Copycat brands get to trade off the heritage of established brands. “By imitating brand leaders, these cheaper products can free-ride on the product leader’s brand recognition” (Horen & Pieters, 2012).
As a result copycat brands provide a convenient shorthand for shoppers who have come to regard the look alike brands as being comparable in terms of quality to leading brands. Copycat brands imitate a leader brand to free ride on the latter’s equity. They can imitate the distinctive, perceptual features of the favourite consumer brand.
Blurring the lines
Today, copycat brands aren’t simply pinching category cues (which would be fine), they are blurring the lines by copying brand cues. Example: a deep blue cap on milk is a category cue for full cream milk. However using a cow that looks very similar to the “Devondale cow” on their copy pack, accompanied by the same colour scheme is confusing for the consumer because the copy cat has imitated a brand cue.
Legal action is too much of a long hard road
The solution cannot simply be found in legal threats to the retailers because they’ll pull their “de-range you” card. Plus from a legal standpoint, because most packaging is quite generic legal action would be a long hard slog and prove hard to uphold for several reasons. When it comes to trademark law, the brand would have to demonstrate the copycat was a direct copy. This “copycatting” has been happening for a very long time, meaning it will be very hard to change now without significant industry wide ramifications.
In the UK, where private-label is more established, there have been legal battles over copycat own-labels and in some cases the supermarkets have been forced to change the packaging, and even the name, or products.
Intellectual property partner Jeremy Hertzog, of UK law firm Mishcon de Reya, said, ‘Brands are cautious about taking legal action because the brand would need to prove that the copycat product is deliberately out to confuse the buyer into believing that the similar-looking product is actually connected economically to the original in some way.’
Tuning brand power back on
Research into the strategic use of appearance has shown that where brands once competed for better performance of their products, today product parity is such that they are now forced to develop competitive advantage in other ways.
Strategy for evolving beyond the copycats and private label brands
It used to be that brands were able to demonstrate their value using their packaging. However, today in order to be successful on shelf brands need to showcase their ownable value through more than just effective packaging. Example: Copycat brands only have their “copied” packaging to show value. This means that it’s easy for them to take success cues from established, loved brands to establish perceived value on shelf.
What can brands really own – that cannot be copied
To be successful brands need to have a really strong brand essence and communicate this across everything they do. The key to success on shelf is finding something truly ownable for your brand. This way even if copycat brands do copy your brand’s packaging, it doesn’t detract from a customer’s perceived value of your brand. You have created and own the emotional connection with the consumer and the brand.
Example: TimTam have created such a strong emotional connection with their consumers that they can change the name, colour etc. of their packaging and consumers will still know in an instance that it’s a TimTam. The same principle applies to a copycat brand, even if they use the same rich brown colour as well as a similar font to the iconic TimTam, it won’t fool consumers into purchasing the product because it’s not TimTam and therefore seen as inferior. This is true even for first time buyers of TimTam’s, not just the brand loyalists.
The old benefits of “better, faster, cheaper” are a given. They are taken for granted and are easily duplicated by competitors and the supermarket brands alike. To get a leg up on the supermarket shelf and claw back the lost ground, brands need to revisit their emotional connection (EC) with their brand and products on shelf. EC is the practice of appealing directly to a consumer’s emotional state, needs and aspirations. EC is designed to trigger a desire for the advertised brand (or product) in such a way that it cannot fully be rationalised.
A brand marketer’s opportunity
Most FMCG marketers are not optimising their EC opportunity. Brands and their products have been left to languish. This has left the door open for the supermarkets, the copycats and the private label brands and those marketers who are willing to look at their packs and how they can use them to forge real EC with their target customers.
Ian Segail is the General Manager – Operations at Sydney-based branding, packaging and design agency Jam&Co.