In the era of stretching a paycheck, generic brands have moved from the fringes to the mainstream. Every day people consider the value of purchasing a ‘non-brand’ when visiting a supermarket, or big box retailer like Costco, Target or Wal-Mart. What people might find surprising (it was to me) is that a generic brand does not necessarily mean the product will be less expensive than the ‘name’ brand.
Wasn’t the whole idea behind generic brands hatched as a way for consumers to pay less while the store could keep a greater share of the profit? An article in Tuesday’s Wall Street Journal http://on.wsj.com/AbOAMK offered some interesting thoughts regarding store brands. It seems at times people actually prefer the store brand to the more established name brand. And they are even willing to pay more for the store brand. What the heck is going on here?
When I shop and consider a store or generic brand versus an established brand I go through the same checklist that I’m sure is the same as many people. If I decide to buy generic or store brand paper towels my expectations are lowered a bit (thinner ply and not as absorbent) but will only buy if the price is considerably lower. Sometimes it is lower, but sometimes the name brand is having a special and the value is better. It rarely (if ever) enters my thinking that I would prefer the ‘private label (fancy name for store or generic) brand.
From the WSJ article:
‘Private-label products still cost an average of 29% less than their nationally branded counterparts. But they are rising faster in price, at a rate of 5.3% last year compared with the industry average of 1.9%, and can sometimes be the most expensive product in a category, according to market-research firm Symphony IRI.
Target’s two-pound jars of Archer Farms roasted almonds, prominently displayed on the end of the nut aisle, recently cost about 16 cents more per pound than Planters’ roasted almonds.’
That Target has been able to create a store brand that costs more than the established brand impressed me a great deal.
The article also noted that Procter & Gamble Chief Executive Bob McDonald said the maker of Pampers and Tide has been balancing its exposure to chains with store brands by expanding distribution in other channels like dollar stores, which don’t sell private labels that compete against P&G products. They are also redoubling efforts to develop new products, particularly at lower prices. “We invest $2 billion a year in research and development, $400 million on consumer knowledge and about 10% of sales on advertising,” Mr. McDonald said in a recent interview. “Store brands don’t have that capability.”
Sounds like someone who is not sure but is hoping he’s right.
Is this a wake-up call for traditional established brands?
Newly hired Ron Johnson, recently of Apple, has taken the reins as new CEO at 99 year old retailer J.C. Penney. It was called Golden Rule Store prior to 1913 having been founded in 1902 by James Cash Penney (I guess his parents had a sense of humor). Mr. Johnson was the brainchild behind Apple Stores and Genius Bars and has taken on a fairly monumental challenge to refurbish a true American institutional brand. Prior to his stint at Apple Mr. Johnson was with Target so he has retail big box experience. An article in Daily Finance offers a good background http://aol.it/ifrUoG.
Mr. Johnson unveiled Penney’s new strategy and logo this week (a square signifying a square deal). One of his first moves is to eliminate the seemingly unending promotions and sales. In fact J.C. Penney had 590 such promotions and sales in 2011. He also will be streamlining pricing to be more consistent, around 40 percent off previous prices, all the time. And as reported in Macnn.com – http://bit.ly/A5gC3X when sales happen, they will be month-long events, and the company will strive to offer “great prices” on items every day. It will also price items in whole numbers, meaning a $20 price instead of $19.99.
I have written (unflatteringly) recently about the trials and tribulations at Sears http://wp.me/pJX7l-y6 and while I’ve not set foot in a J.C. Penney store (at least not that I can recall which says something in and of itself) in a year or so, I feel Mr. Johnson has got the right stuff and is saying and doing the right things to refurbish the J.C. Penney brand.
Having a brand stand for something and have that position understood by consumers is the challenge that Mr. Johnson is taking head on. I like that. He’s also avowed to invest $80 million a month in advertising and promotion. I like that too!
What’s your take on J.C. Penney? Is it a tired brand beyond repair?
It’s an election year here in the United States. 2012 will also mark changes in the Chinese government as well. The backdrop to all of this is a seemingly constant stream of rhetoric from the U.S. that China has unfair trade practices. President Obama made reference to that in his State of the Union message this past Tuesday calling for the creation of a new trade enforcement unit that will be tasked with investigating unfair trade practices in countries, he said, “like China”. Both President Obama and the Chinese government know that any punitive action as a result of this investigation is highly unlikely.
I’ve been to China a handful of times over the past two years and our company is doing business by helping Chinese companies in the U.S. as well as helping U.S. companies enter the Chinese market. I’ve learned a great deal and have much more to learn in the coming years. However I have learned a number of very important things. Here are three to think about:
1) The Chinese will not be pushed around. It’s like when you are being yelled at by someone and you eventually just tune out. Jumping up and down demanding that China accede on trade practices and currency valuations will have little or no impact on how China will act.
2) Win-win does not mean the same thing to the Chinese as it does to Americans. I can hardly count the number of times I’ve had a Chinese businessperson tell me Win-Win right? With a smile and a handshake. Win-win to the Chinese means the company wants you (the U.S. side of the venture) to take all the risk in helping them develop their business in the U.S., and for the most part, non-major Chinese companies are unwilling to invest any money in developing the U.S. market. This should not be all that surprising given that just a little over thirty years ago the notion of marketing and advertising was as foreign as – well, a free society.
3) It is an understatement to say that it takes patience to have your China market strategies bear fruit. When I tell my Chinese associates and U.S. expatriates that we’ve been able to gain client engagements in China in less than two years they are amazed and impressed. For me it feels as if it’s taken a really long time with constant work, some missteps and changes in strategy. I’ve been told repeatedly that having success in anything less than three years is unusual.
I believe most Americans are smart, smart enough to realize that starting a trade war with China will not help the U.S. get its goods and services into the fast-growing market any faster. Yes of course we all desire a level playing field and at the same time it’s frustrating to have to deal with the subsidization of Chinese enterprises by the PRC government. However the U.S. and other western countries will be far more successful if they try to find more collaborative methods to effect policy when it comes to the Chinese.
The Chinese are not focused on helping the west rebound from its financial difficulties. China has its own problems. But the Chinese are aware that they are holding the right cards at the moment. That China will continue to try to exploit its hand should come as no surprise to anyone.
But somehow that doesn’t seem to be the case. Do you think I am being naïve? Practical? Neither? Both?
The old saying that ‘information is power’ is true, except when it’s the wrong information. Among other things social networking allows communication to large numbers of people by one single individual. A very cool feature indeed but with that comes a responsibility (at least as far as I am concerned) that the personal information posted about other people is correct.
Last week I received a message from a friend noting that there was some less than flattering buzz going around on Facebook regarding something my wife was being accused of doing (she didn’t). Apparently someone we do not know had been ‘wronged’ and tracked the wrongdoer to a physical address – in fact the address where we used to live, having moved out three months ago. The affronted party got the home address from the police and checked it in a reverse lookup. Of course we were still listed as living at our old address as records are not always updated promptly – no surprise there. It went downhill from
there.
Thinking that the offending party had been found out this person went on a social network and began to post a vitriolic rant on how my wife was a terrible and horrible person and that the police were involved. Naturally my wonderful wife was shocked and had no idea what was going on – at least not at first. By piecing things together she was finally able to figure out what took place.
My wife tracked down and contacted the person who had been posting the incorrect information. She received a lukewarm apology but without any or at least enough contrition.
You’d think that a person would be horrified at erroneously accusing an innocent person of wrongdoing in a public forum like a social network. But the idea of going public in the first place to embarrass someone due to a personal grudge is unfortunately not all that uncommon these days.
What I am suggesting is that if you are going to go the route of publicly calling out someone for wrongdoing in a social network or other public forum – AT LEAST GET IT RIGHT! But in my opinion better if you don’t do it at all and approach the person one to one first. If then you are not satisfied and want to go public – do it at your own risk.
I saw it again last Saturday night. At the restaurant where my wife and I were sharing a nice dinner on a snowy Saturday night there was a couple at the next table who spent a good part of the time reading/typing on their mobile devices. They were not talking, nor glancing at one another. The really sad thing (at least as far as I am concerned) is that is not all that unusual.
Now this is going to make me sound old – maybe older than I am, but I remember when there were no mobile devices and you actually had to have a conversation with the person with whom you were sharing a meal. You couldn’t fake a call from someone in order to get out of a bad ‘blind’ date or any kind of date for that matter which just made it much more challenging BTW.
Look around any restaurant for someone sitting by themselves. Perhaps they are waiting for someone(s). Maybe they are eating alone. But how often do you see a single person just sitting there looking out and around, not on their mobile device? Of course many people read a book or magazine (electronic or not) when dining alone but I recall from black and white movies a time where someone would sit in a restaurant and not read anything and simply just sit there and wait, and think. Could you imagine?
How often during your waking hours do you not engage in some sort of stimulus? That is, how often do you just sit, stand, or run, and think without any other stimulus (think iPod)? I think for many people this is happening to an increasing degree (in the U.S. at least) and is inexorably changing not only the way people interact but even more significantly people’s ability to spend idle time simply thinking about whatever crosses one’s mind. It’s even more prevalent for people under 30 who appear to me to never stop interacting with technology when not in the presence of others. Is there any time that they just sit and do nothing but think or day dream?
It goes way beyond the seeming inability of people to spend any idle time. Answering an email or phone call when in the presence of others when 99% of those contacts are not emergencies is not multi-tasking in my opinion. How can you make the person you are with feel that you care about them or what they are saying when you stop to answer a phone call, text or email? But somehow that’s become the norm rather than the exception. People not only have difficulty being idle, they feel the need to manage two interactions simultaneously.
How about you? Do you spend quiet time just thinking? No music or electronics of any kind. Quiet. Can you? Will you?