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Why Coke, Tide, and Kraft thrive

The reasons go beyond global recognition. Quality products, the right package, and consumer trust help them dominate their categories and also discourage private-label competitors.
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The growth of private-label brands is keeping managers of national brands awake at night. But the surge of retailers’ brands isn’t occurring uniformly across all categories. In fact, national brands still dominate some categories with an iron fist. Among them are Coca-Cola, Tide, and a host of Kraft subbrands, and a yearlong shopper-experience study by The Integer Group and M/A/R/C Research identifies these as brands that consumers would least likely trade for private-label products.

Besides improving the packaging for their store brands, retailers are also smart enough to identify categories in which one or two dominant national brands are king of the castle. Retailers are tending to focus the growth of their own brands in categories lacking a dominant brand.

What makes Coca-Cola, Tide, and Kraft so dominant? In some cases, it’s distinctive packaging. But it’s also product quality and brand recognition. Perhaps more important, these brands are authentic; consumers trust them.

Product quality, distinctive and functional packaging, and trust are three critical legs of the stool that all need to be addressed to compete effectively against the surge of private-label brands.

Here are some of the study’s findings:

• Shoppers buying more store brands than last year outnumber those buying fewer by more than four to one (36% vs. 8%).
• More than eight in 10 consumers seek products on sale and compare prices between brand name and store brands when buying groceries or household products.
• Consumers who are buying more private-label products say they won’t return to name brands in the foreseeable future.
• Though two-thirds of shoppers believe that name brands offer more novelty and innovation, less than half believe that name brands also offer better or more reliable products.

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