Tell me brands don’t matter.
While you may not care about Walmart or how it does business, there is something to be gained from watching them learn marketing and merchandising lessons – especially when they learn the hard way.
Think about it. Walmart is huge. Regardless of how you feel about the company, they represent a giant consumer laboratory – when Walmart makes a move, the cause and effect can be clearly seen in statistically significant numbers.
Case in point: Over the last year or so Walmart has been reducing the number of “branded” projects they carry (little names like Kraft, General Mills and Heinz) and increasing placement of in-house brand “Great Value” products.
The logic seemed to hold up – Walmart believed (and Target, Costco, Walgreens, too) that too many choices actually reduce the overall spend on a per visit basis. Of course house brand products are more profitable too, but, according to an article dated June of 2009 in the Wall Street Journal, according to Walmart’s chief merchandise officer John Fleming, research showed shoppers spent an average of 22 minutes in a Wal-Mart, but suggested that the wide product variety was curtailing the number of items they put in their shopping baskets.
Now, Walmart is starting to reverse course due to customer backlash. Turns out, people don’t want just great prices – they want the brands they love at a great price. The power of the brand brings extra value in the eyes of consumers – enough to create preference over house brands.
We can argue all day that Great Value shredded cheese is the same or even better than Kraft – but the value of the Kraft brand makes this argument irrelevant. Perception is reality and people perceive well branded products (and services) as superior.
These same principles don’t just apply to mega retailers. Investing in a healthy brand is not only worthwhile, but in a universe of “me too” products and services, it may be just the ace in the hole you need to win the game.
What do you think? Feel free to comment.