In the past, the retailer focus was all about category management. Today, it’s shopper marketing we’re all talking about. This evolution suggests that many of the time-honored category management precepts we held near and dear may no longer have the relevance they once did. Two of these notions — product tiers and category roles — are ready for some rethinking.
THE TRACKS OF MY TIERS
Private brand strategy used to be a matter of simply developing good-better-best options in relation to the leading brands. “Good” implied opening price point items that offered functional value at a somewhat lesser quality. “Better” was simply code for national brand equivalent (NBE). And «best” was mostly optional.
Little by little, however, consumers are coming to regard “good” as national brand equivalent with everything else needing to be of superior or differentiated quality. Value brands are declining in share and value merchants (i.e.,ALDI) have significantly raised their quality profile to meet and even exceed NBE levels.
Some retailers, with Costco Wholesale as a leading example, offer only a single tier that provides both superior quality and value relative to other alternatives. Others are driving new growth with attribute-focused brands (i.e., Kroger’s Simple Truth) that defy traditional tier thinking. It is with these brands that retailers (including online players such as Boxed) are moving consumers away from thinking that all private brands are «pretty much the same.” Our research says about half of consumers feel this way.
WHO WANTS TO BE ROUTINE?
The concept of category roles has become an anachronism in today’s marketplace. To effectively execute shopper marketing principles, retailers really need to think about having a destination component in every category, a concept we call “dynamic differences.” It is retailer brands that assume the roles, not the categories themselves.
Traditional category management practices assigned most categories to a “routine” role defined as offering a consistent and competitive shopping experience. In reality, it was no more than a base expectation that the shopper held for every competing retailer. Being routine is not enough today — “Hey, our goal is to be no better or worse than anyone else in this category” hardly seems to be a flag to rally around. This concept was designed to support the age of dominant national brands, where it can maximize performance of a brand across an entire channel without providing any meaningful points of differentiation for the individual retailer. It is a Trojan horse.
Convenience categories, too, have lost their conceptual importance. With most consumer packaged good (CPG) products available in multiple channels and online, shoppers can conveniently choose a destination source for most every item. In fact, trips have become highly fragmented and most shoppers routinely spread their CPG purchases across many channels and online sources. Retailers need to assess every category and ask how their brands can make a difference — either by making it not worth the shopper’s time to go elsewhere or by creating true destination status. It is a well-used example, but Trader Joe’s does not meet the traditional definition of a destination category for wine — it simply lacks the available range — but it has created a destination status with its Charles Shaw brand along with a focus on a highly curated selection of value-priced choices.
Destination categories can be created with single retailer brand items. So, what should we do?
1. Create new brands with clearly defined attributes and expectations that appeal to specific groups of shoppers. A national brand target is far less important than before.
2. Recognize that NBE still has a place, but rethink products to create a differentiated value either through packaging, new flavor profiles, information or merchandising that offers more than a simple alternative to the national brand.
3. Never be “routine” with your private brands. You get to choose whether your brand is a destination, or just a pit stop along the way.
Jim Wisner is president of Libertyville, Ill.- based Wisner Marketing Group, a firm that assists manufacturers, retailers and trade associations in developing and implementing solutions to complex marketing, merchandising and product development issues.
