New products help prevent the decline of name brand shares. Private labels have a harder time against name brands that maintain a large price gap and offer new products with new intrinsic or usage benefits. Innovating and differentiating is the fuel to staying ahead of private labels, as well as conducting competitive private label research.
OTC drugs switches and the launch of innovative new OTC products typically drive market growth for the OTC industry but such new launches occur on average only between 2-3 times per year for the entire industry.
Innovation is key to keeping private label at bay but there are also other strategies and tactics that can help.
- Make your brand difficult to copy and make it something that the consumer will be willing to pay more for
- Use special product sizing, something that is difficult to line up side by side with private label brands and compare.
- If you’re a close rival, follower brand, consider joining forces with private labels by offering your own PL brand.
- If you’re the category leader, rather joining forces, consider using multi-tiered strategies.
- Avoid reckless promotion. Don’t train the consumer to wait for deals.
- Promote any local ties. Remind shoppers when a product is grown, processed or warehoused locally.
- Promote a cause, social responsibility. Donate to a cause for each pack purchased. Make this cause something that ties into your product, category.
- Promote via online channels. Retailers have been effective at this and name brands have to do better. Use social media to promote your brand.
- Co-brand with private labels. Consumer-centric bundling and promotion of private label and name brand, mix and match is an effective strategy for increasing basket ring.
- Clearly communicate the value proposition and maintain the optimal price gap.
- Keep advertising. Lower ad spend ties directly in with higher private label penetration.
- Use your brand and category expertise to push your brand and the category forward. Make your brand a destination brand.
Although cost-conscious consumers sometimes choose private-label over-the-counter (OTC) medications, new qualitative research from Market Strategies International has identified a high level of loyalty to name brands for consumers who believe they need “more” from their medications. Consumers are more likely to turn to name brands for urgent or serious conditions.
Healthcare Division, Market Strategies International Senior Vice President, Barbara Deradorian, says “While consumers are very comfortable with private-label (store brand) OTC medications overall and generally believe they’re just as good as the national brands, there’s a ‘something more’ to the national brands that consumers want when they’re faced with urgent conditions like severe cold or flu symptoms or diarrhea.”
The other area where Market Strategies researchers found a higher-than-usual preference for name-brand OTC products is in the pediatric products aisle, where parents who are comfortable choosing private-label products for their own use instead turn to trusted name brands when purchasing for their children’s needs.
“While they can’t pinpoint what makes a name brand better in these situations, they’re still willing to spend more to ensure that they get the best possible results,” Deradorian adds.