Store vs Name Brands Face-off

As a subscriber to McKinsey Quarterly Newsletters, I received an article on the state of economy from them several months ago which touched upon the issues of changing consumer behavior in tough economic times. I still clearly remember the first line of the article: "During the recession, consumers have tried cheaper brands... and loved them!"

Now this article by Consumer Reports goes along with the overarching idea of changing spending trends among U.S. consumers and elaborates on the fact that oftentimes cheaper store brands are at least as good as their more expensive brand name counterparts. Check it out: Taste Test: Store Brands vs. Name Brands by consumerreports.org from Yahoo! Shopping.

Recurring reports of increasing consumer frugality and value seeking put long-standing brands under pressure to justify their higher prices and create value for consumers without decreasing the price or at least not decreasing it too much. That's where branding comes into play more than at any other time. It creates intangible value for consumers which suddenly justifies a higher price tag. For instance, how is one brand of cola better than any other? Some would argue it's about taste, but the results of taste tests constantly prove otherwise. It is just that by buying Coca-Cola at Christmas people are not simply buying soda to drink, they are taking home a piece of the holiday season. Can one even imagine getting a bottle of store-brand cola to put on the holiday table because it is cheaper? The costs in ruined atmosphere would be way higher than the dollar you saved on your purchase... Whatever who might say, but a good Marketing Department supports the bottomline like nobody else in tough economic times and beyond - no matter how hard it is to digest for Finance majors.