It has been well reported and documented that private label brands are surging in the US. Whether it is due to their optimal mix of great value and experience or other reasons, they have forced name brands to re-think strategies. It is also well-known that Millennials are contributing to this trend as they are prioritizing experience over attainment.

In this short blog entry, we aim to show just how important this generational dynamic is to the future of private label brand purchasing. In addition, we will also highlight solutions MSW-ARS has for helping name brands both measure and address concerns in this area.

First, it is important to note just how much of a generational difference there is with regard to purchasing name brands “wanted most” in the table below comprised of thousands of responses across 60+ categories. The difference between Millennials and Baby Boomers is far greater than any other standard demographic. This suggests that age is one of, if not the most important socioeconomic indicator in determining one’s propensity to buying brands they most desire. It is not that Millennials do not desire name brands, they are just choosing not to purchase them at the same rate as previous generations.

Not surprisingly given “wanted most” trends, Millennials are also the most likely to purchase cheaper/generic brands. In the table below, Millennials are well over twice as likely to buy generics/less expensive brands versus Baby Boomers.

What does this mean for some of the individual categories we track? Here are a couple of tables showing the differences between Millennial and Baby Boomer purchasing in 2017.

First, those purchasing the brand they wanted most:

In addition, here is a table showing those purchasing a less expensive/generic brand:

The previous data can lead to many different hypotheses, including the following:

• Is this just a life stage phenomenon?  Will Millennials’ purchase patterns more resemble Gen X and eventually Baby Boomers once they become older?
  • While it is possible Millennials will more resemble previous generations as they age, we are not confident that they will. When compared to previous generations, Millennials have lower income, which in turn would suggest why they are turning more toward generics/lower priced brands as opposed to brands they truly want. However, in the tables above, the three income tiers do not differ much with “most want” and “less expensive/generic” purchasing, especially when compared to the generational tiers. So, unless another Millennial age-dependent characteristic is currently driving their added tendency toward purchasing generics/less expensive brands, and will eventually go away (perhaps something like high student loan debt, which was not tracked), then we believe the generational data is more of a change in attitudes toward generics/name brands than any special constraint unique to any younger generation.
  • In addition, the previous tables show very different trends in purchasing behavior simply based on different categories. Millennials have similar buying trends to Baby Boomers with categories such as Athletic Shoes, Energy Drinks, and some Electronics, while they are MUCH more likely not to buy what they most want when purchasing a Sedan, Analgesics, or Bathroom Tissue. To us, this further suggests Millennials are not just defaulting to generics/less expensive brands everywhere, they are simply realigning what is worth paying more for.
• If current trends hold, then what does this mean for the generations after Millennials once they become a large portion of the consumer base? Those born in the year 2000 and later are entering the market for many different goods and services now that they are turning 18 and becoming adults.
  • To answer this, certain assumptions have to be made in order to make any type of prediction. These three scenarios immediately come to mind:
    • Scenario 1 – Continuing Trend: If current trends hold, then we could very reasonably expect the next generation after Millennials (Generation Z) to be even more likely to purchase generics/less expensive brands and less likely to purchase the brands they truly want.
    • Scenario 2 – Millennials Become Like Gen X: If Millennials actually do go on to more resemble earlier generations as they age, then we can reasonably see a situation where the generations simply “replace” one another. Generation Z would have purchasing behavior close to that of today’s Millennials, while Millennials become more like today’s Gen X, and Gen X becomes more like today’s Baby Boomers.
    • Scenario 3 – Current Trends Are Just The Tip Of The Iceberg: A lot of trends begin with younger people, then eventually spread to the older population (see social media). If this happens with generic/less expensive brand purchasing, then it’s possible that ALL of the current generations could eventually see an increase – even Baby Boomers. This would likely be one of the worst developments for name brands that may be at a price premium.

We also should not fail to mention another scenario, which is…no one really knows as of right now. Unlike the previous three scenarios, this is the only one we can currently believe with high confidence. That may sound discomforting, but there are action steps you can take in order to be fully prepared for what comes next on this front as well as future decisions for your brand.

We at MSW-ARS offer custom, cost-efficient solutions to both diagnose and address potential brand and category decisions that may arise via the rise of generics/less expensive brands or others elsewhere.

To diagnose category and brand opportunities, we offer custom tracking that can be as streamlined or in-depth as you prefer. In fact, the data used in this blog post is from our syndicated Brand Strength Monitor platform (TBSM), which includes our choice metric that is the ONLY validated measure of brand value – and at a low cost. For example, with that particular data, you will be able to diagnose where your category stands in this generational battle, and be able to see the impact for your specific brand relative to other brands (not shown in this blog, but is very easy to do).

To help address these opportunities, we offer our strongly validated copy testing products that can help determine which route is the best for your brand to take in order to make the best decision for overcoming the rise of generics/less expensive brands, as well as others. With the rise in popularity of generics/less expensive brands, we have made improvements to our copy testing methodology to help directly address this area.  Our approach aims to identify the consumer journey, and how brands can make themselves relevant to consumers’ growing desire for experience.

Please do not hesitate to reach out if you would like additional information regarding this blog post or what our custom products can do for you.

Thank you for reading!

Late last year we wrote a few pieces about tracking best practices.  These pieces really struck a nerve.  As 2017 gets rolling and many of you are probably thinking about and evaluating your research needs and objectives for the year we thought it would be helpful to revisit and expand on the theme.

As a company that’s very involved in the tracking space we have a lot of opportunity to hear directly from clients and prospects what’s working for them and what’s not.  What we hear repeatedly is a lot of dissatisfaction in the research community with trackers.  We hear things like;

“too big”

“bloated”

“measuring too much”

“too expensive”

“not actionable”

etc.

None of this is new but it seems to be at a fever pitch recently.  As such we’ve been fielding a lot of questions about what we recommend as best practices.

We have 5 best practices that we consistently offer up to our clients, that we have proven to represent a best in class approach to tracking – a sentiment shared by many thought leaders in our industry.  Most of these can be found in a paper that our own Frank Findley, EVP of Research presented at the ARF Re!Think Conference last year.  (contact us for the full paper)

1. Utilize One Primary Aggregate Measure

Utilize one primary aggregate measure.   The best in class choice for this measure is our Brand Preference.  This is supported by many independently validated research projects, most recently the MASB work presented in this paper.  The three most important features of this measure are its ability to capture the impact of all other ‘equity’ measures, take into account competitors and data collection at the individual respondent level.  Brand Preference is the cornerstone measure of our Brand Strength Monitor service.

2. Supplement This With The 7 Other Measures We Have Proven Work Across All Other Categories

Once you’ve established this, then you should use the other 7 measure that we typically see work across all categories to help explain the data. They are:

1. Awareness Unaided
2. Brand Loyalty
3. Value
4. Purchase Intent
5. Brand Relevance
6. Awareness Aided and
7. Advocacy

3.Customize For Your Specific Category

Then what we do for clients is customize their trackers to address specific category needs.  For example; convenience might be an important measure for one category but not another.  To gauge this, each element can be analytically compared vs the aggregate measure to calculate a derived importance.  The strengths and opportunities for the brand can then be easily found by crossing derived importance vs. brand performance on the attributes (see matrix example below).  This type of analytics is usually done once per year or every two years as category drivers tend to be steady in the absence of disruptive changes in the category.

4. Track Continuously or Less Often Supplemented With “Deep Dives”

Collectively; the brand preference, the seven cross-category measures, and the category specific measures can be arranged into a score card and tracked over time.  Currently 70% of our clients collect this data continuously while 30% do waves (typically two per year).  For those that collect it continuously, the data itself is typically rolled up monthly with ‘deep dive’ reports going to management quarterly.

5. Harness The Data To Run Segmentation Analyses

Along with the scorecard, there are also generally segmentation type analyses where performance on KPIs is used to find and qualify consumer clusters or to monitor trends on quickly growing consumer groups.  For example, monitoring millennials has become standard.  This chart from the MASB, Brand Investment & Valuation Project demonstrates this point:

So, if you’re like many that we’re hearing from recently, and that with whom we’ve already shared this thinking with, this may be a revelation.  If you’d like to read more about this, please contact us – we’re happy to share a full white paper with you and we can discuss your particular needs.

Recently, Samsung encountered a problem with some of their lithium ion batteries – they’re exploding!  Particularly those in their Galaxy Note 7 smartphones.  The causes have been determined¹, but there is still a lot to be remedied as many airlines have recently warned passengers not to use them on planes² and they’ve been forced to issue a recall³.

A question you may have regarding this developing situation is: What, if any, impact will this have on the strength of the Samsung brand?

Even though they have been receiving a lot of press regarding this issue, Samsung is not the only company to utilize these types of batteries⁴.  Also, Samsung is a very large company with a breadth of quality product offerings that go beyond just battery-powered devices.  So it is theoretically possible that that the overall brand will not suffer at all.  Another possibility is that there will be brand erosion but that it will be confined only to smartphones or, perhaps, to just battery-powered devices.  Finally, it could be that the issues will foster a general distrust of the brand that will umbrella over Samsung’s offerings in all categories.

By using The Brand Strength Monitor we can directly answer this question.  TBSM provides continuous collection of the MSW•ARS brand preference metric, the only independently validated measure of brand value.  Through its trend we can quantify what, if any, impact the battery problem is having on the Samsung brand.  As shown in the below table, currently seven categories in which Samsung competes are being tracked in this manner.

The first observation is that brand preference for Samsung is eroding quickly in the smartphone category.  In August alone it dropped over three percentage points versus the prior four months.  This erosion does not include the more recent developments regarding the device recall and airline warnings.  Once September data (and beyond) is available we will be able to gauge the full extent of this decline.

The second observation is that this erosion is spilling over into all categories where battery safety and performance are important product features.  Even though there haven’t been reports of battery issues for smartwatches, tablets, and laptops none-the-less Samsung is experiencing substantial (over half a share point) preference declines in these categories.

On a positive note, brand preference in the non-battery dependent categories is holding relatively steady.  This suggests that overall Samsung corporate equity has not yet faltered (at least through August).

If Samsung continues to lose brand preference across its battery-powered device categories, it undoubtedly will take time to rebuild what it once had.  However, it will be far from impossible.  Brands like Samsung, with strong legacies and established equity, can weather quite a storm.  Brands have staged comebacks after much worse incidents – such as Tylenol a few decades ago.

Brand preference plummeted 32 points during the Tylenol tampering incident, as the nation watched several people die from the poisoning.  The Tylenol brand could no longer be trusted.  As Brand preference dropped, Tylenol’s market share fell 33 points.  As Johnson & Johnson addressed the situation responsibly, the strength of the brand’s previous contract (trust) in the minds of consumers was rebuilt, although a bit more slowly than it was damaged.

To be fair, smartphones and tablets (and consequently Samsung’s offerings in those categories) have only existed for a fraction of the amount of time Tylenol had been around during the aforementioned incident.  So, while the overall Samsung name may be relatively unscathed by recent developments, its specific lines in battery-powered device categories may not be so fortunate.

How Samsung continues to handle this brand crisis will go a long way in determining how low their brand preference will drop – as well as how long their recovery takes.  We at MSW●ARS Research will be paying close attention.

1 – http://www.chicagotribune.com/bluesky/technology/ct-why-those-samsung-batteries-exploded-wp-bsi-20160912-story.html

2 – http://money.cnn.com/2016/09/08/technology/samsung-galaxy-note-7-airlines-battery-fires

3 – http://www.nbcnews.com/tech/tech-news/samsung-stops-selling-galaxy-note-7-after-battery-explosions-n641891

4 – http://www.cbsnews.com/news/lithium-battery-fire-risk-samsung-galaxy-note-7