Blog: The importance of branding
Dean Best | 1 December 2008
For many of us, the troubled global economy is a serious cause for concern: something to be monitored carefully as we batten down the hatches and prepare to weather the storm.
As consumers look to cut costs, brand manufacturers are increasingly relying on brand loyalty and their established relationships with customers to maintain sales momentum. Those who lack this brand strength could find themselves falling by the wayside.
As Edward Jones analyst Matt Arnold told just-food last week, the strength of ConAgra's brands is proving cause for concern to some and, as a consequence, the group's share price has slumped.
"In most categories, ConAgra has the number two brand or worse. With that type of brand strength and in this consumer environment… they are more likely to fall victim to trade down than companies who have stronger brands and stronger relationships with their customers," Arnold said.
However, for others in the highly competitive food sector the downturn represents an opportunity to cash in on the weakness of rivals.
This is exactly what US convenience chain 7-Eleven is hoping to do with the nationwide rollout of a new range of private label snacks under the 7-Select brand name.
7-Eleven president and CEO Joe DePinto told just-food last week that the launch of a private label alternative to branded snacks was well timed. The company hopes to appeal to customers looking to trade down and, DePinto claimed, the line of 32 products – ranging from potato chips to confectionery – will be sold at a price 10-20% lower than the branded alternative.
Even as the private label offering in the US matures, own-brand alternatives in the snack sector remain relatively under-developed. 7-Eleven's bold move could change this, intensifying competition in the sector and challenging the status quo. However, as the retailer throws its hat in against established snack brands like PepsiCo's Doritos and Nabisco's Chips Ahoy, consumer trust in the 7-Eleven brand will be put to the test.
Katy Humphries, deputy editor
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