COVID-19 has radically changed the context in which shoppers make purchasing decisions, often resulting in a forced trial of brands that they may not have previously considered — private label brands among them. This disruption is as much an opportunity for smaller brands as it is a potential threat for category leaders.
Focus on what you can control
Private label manufacturers and retailers should focus on what they can control. Get back to basics with the 4Ps: product, price, place and promotion.
Solid behavioral insights are the strongest foundation upon which to build your new marketing mix. Skim's Habitual-Deliberate Decision Loop model provides a framework for understanding disrupted decision behavior.
In fast-moving consumer goods segments, consumers spend most of their time on the habitual side of the loop during “normal” times. Shoppers know which brands they prefer, how often they purchase, where they shop, and how much they’re willing to pay. These decisions don’t involve much deliberation; they’ve become habits. Leading brands want to keep their customers in this habitual loop, and they use their 4Ps to do so.
On the other side of the decision loop, we see deliberate behavior. Here, consumers are more conscious of the choices they make, such as in the purchase of specialty foods or personal care items. On the deliberate side of the decision loop, store brand marketers can use the 4Ps to trigger selection — whether in times of disruption or not.
Adapt your 4Ps to a disrupted reality
When you understand your consumers’ decision loop, you can more confidently adapt your 4Ps to a disrupted context. Here are some considerations given what we know today about disruptions to the market for private label store brands.
Product: As we prepare for a recovery period — and subsequent recession — it’s important to consider opportunities presented by recent behavioral shifts. “Forced trial” of new brands and products can drive future purchases. The burden here falls on product experience and the ability of the brand to reassure buyers and convince them to stay with their newly discovered product.
Past crises have taught us that strong brands recover significantly faster in post-crisis situations. Now is the time for store brands to take advantage of forced trials to dial up equity-related communication and strengthen their competitive position.
As you consider opportunities to maximize your private label portfolio, ask yourself:
- Did the disruption permanently change the context of what people feel they need? For example, awareness of ingredient authenticity and sourcing was already driving behavior pre-COVID; will this trend accelerate as consumers become even more focused on personal health?
- Which features and benefits are more/less valuable as consumers make deliberate decisions during and following the crisis?
Place (omnichannel): Online shopping and social media consumption have accelerated. However, for certain categories, countries and consumer demographics, the change in context is driving changes in online shopping behavior and forced trials of brands that are more readily available.
In an online retail environment, brands have the opportunity to quickly send a clear message, leveraging both visual imagery and product descriptors. Across CPG categories, benefit claims are key. Effective product hero images, combined with clear product descriptors can help store brands to enter consideration sets.
Price: A COVID-19 validation pricing study Skim conducted in April revealed little change in price sensitivity across categories. While we do see a shift toward lower-tier and large-pack offerings, shoppers tend to stick with their brand of choice, if available on the shelf.
Our research also reveals two distinct groups of consumers:
- Shoppers who value added benefits and efficacy and generally gravitate toward higher-end products.
- Shoppers who are more cautious when it comes to spending and gravitate toward lower-tier brands.
Follow your customers’ disrupted decision loop to find opportunities for store brands with each of these shopper groups.
Promotion: Depending on where consumers are in their decision loop, advertising and claims may aim to reinforce brand loyalty, or it may need to trigger an action, such as a repeat or trial purchase.
You may even offer multiple private label brands, each with their own values and tier-based benefits. Store brands promising more than price-related value can cultivate a loyal following. Consider the three most important consumer needs at the moment: protection, connection and entertainment. Consumers are adjusting their beliefs and behaviors daily. Your promotions likewise must adapt to those changes.
The magnitude of the COVID-19 crisis is unprecedented, but it will pass. The pandemic has certainly altered decision-making, but we’ve yet to see how many of these changes will stick. Once again, in times of uncertainly, get back to basics. As you reassess your marketing mix in the short and long run, think carefully about how you can use the 4Ps to influence consumers at each point in their habitual-deliberate decision loop.
Krasimira Mladenova is a director at Skim, a global insights agency specializing in decision behavior. Mladenova helps clients solve challenges related to design, communications, and pricing across CPG categories.