Consumers Moving Away from Big Brands

Peter Roesler, President - Web Marketing Pros

By Peter Roesler

President, Web Marketing Pros

research-statisticsThe internet has changed the way people learn about new products, shop for the lowest prices, and engage with the retailers and brands consumers care about the most. Though the internet originally benefited big brands the most, the growing number of smaller retailers with quality goods and prices have caused consumers to rethink their relationship with some larger brands. According to a recent study from Deloitte,  nearly three-quarters (73%) of Consumer Product Good brands have declined in the ‘must have’ category.

There are a lot of factors at play here besides the internet such a move for more organic foods rather than the boxed products many CPG food brands sell and the growth of the maker movement where people search for artisans to make a wide variety of products. Similarly, the recession showed many people they could save money without cutting their quality of life by forgoing name brand options. Regardless of the reasons, the result is clear, a decline in people only buying name brands and an increase in willingness to try new products.

According to Deloitte, nearly two out of three (65%) consumers say they are ‘are more open’ to buying store brands. The data underscores some of the reasons for the decline listed above. For example, there’s data that show the internet is affecting the choices people make. The majority of consumers (55%) say they use digital channels to research products and nearly half (48%) say they use digital channels to compare prices.

There’s also data that shows how the maker culture is fueling some of the flight from brands. The study found that 25 percent of shoppers say they’ll 10 percent pay more for ‘innovative products’, something that makes artisans happy. This goes beyond clothing and art. One in three (33%) consumers say they’ll pay more for ‘craft versions’ of food/beverage products.

“This is a critical moment for consumer product companies,” said Barb Renner, vice chairman, Deloitte LLP and U.S. Consumer Products leader. “While the majority of consumers say they are committed to sustained frugality year after year, our findings point to early signs that they may finally be responding to a belated but increasingly strong economic recovery. It creates tremendous opportunities and risks for companies in this sector, given households’ lack of commitment to national brands brought on by years of stretching dollars to the limit. Brands that get things right can use the economy’s momentum to regain their place on consumers’ shelves, but those that move too slowly could very well be left behind.”

Though this new environment clearly creates opportunities for smaller retailers, large brands and store owners can use technology to their advantage. For example, business owner should use mobile marketing that encourages people to look up prices, discounts, product reviews, videos and more, as they shop. According to the report, the majority of shoppers (51%) make their purchase decisions at the shelf.

The report also gives an indication on what drives these “at-the-shelf decisions. Nearly nine out of 10 (89%) of shoppers are motivated by discounts. Four in five (81%) impulse buy on previously seen marketing. And about three out of five (63%) are looking for a change and buy because ‘they want to try’ new products.

“Although price remains the single biggest factor influencing at-the-shelf purchases, many other aspects can also catch shoppers’ attention,” said Rich Nanda, principal, Deloitte Consulting LLP and co-author of the study, according to media reports. “CPG companies should step back and consider challenging the status quo, rather than immediately resorting to discounts and promotions. Focusing more effort on non-price related triggers might seem risky in the short-term, but may improve long-term brand health, loyalty and margins.”

This report has a lot of good information for big brands as well as small retailers. Regardless of the size of a business, it’s important to adapt marketing tactics to meet changing consumer opinions. This data shows that people are moving away from big brands, retailers big and small should pay attention to these trends and change their model accordingly.

For more news on the way the internet changes commerce, read this article on how proximity affects consumer decisions.

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