This Little Piggy… Has No Name.

Reading ellingdahlen’s blog about generic store brands such as Superstore’s No Name and Shoppers’ Life Brand brought to my attention an interesting point about such manufacturers. They are able to substantially reduce marketing administrative costs by piggybacking on products which they specifically imitate. To illustrate, say we visit Superstore and see Orville Redenbacher’s microwavable popcorn. Immediately to its left on the same shelf is none other than No Name’s own microwavable popcorn. Undoubtedly, No Name strategically placed their product there to attract customers’ attention – as ellingdahlen mentioned, it can very effectively target customers who are consciously saving money on groceries. We will probably never see an ad for No Name’s popcorn, but we may see Orville Redenbacher ads all the time on the television.

The generic brands’ strategy goes like this: Let these major players spend as much money as they want pushing their products and luring customers to the stores. Once there, the generic brands intercept with their lower priced products to hook in these unsuspecting customers to the right shelf. A simple matter of drawing attention via price tags. The keystone in this approach is No Name’s willingness to slash the price and offer an essentially identical product for a fraction of the money. But does that mean they are thinning profit margins with a move like that? Not necessarily, as they substantially reduced their costs from not having to advertise as heavily (they feed off the big companies’ advertisements).

The gambit, consequently, is to sacrifice marketing for the budget appeal, then compensating by free-riding on their competition’s marketing. Now, I’m not in a position to analyze how effective this is, but at the very least I would say it’s an exceptionally artful use of resources (and I’m not referring to their own!)