Changes in Consumption Patterns During the Recession Time - From Global and National to Generic Brand

8/3/2019 Changes in Consumption Patterns During the Recession Time - From Global and National to Generic Brand

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MACQUARIE UNIVERSITY

CHANGES IN CONSUMPTION PATTERNSDURING THE RECESSION TIME - FROM

GLOBAL AND NATIONAL TO GENERIC BRAND

Tran Anh Duy

ID: 41944208

8/22/2011


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Table of Contents

1. Introduction ............................................................................................................................. 32. Generic or Premium Generic Brand become a smart choice during Economic Recession ..... 4

2.1. Generic Brand .................................................................................................................. 42.2. Changes in Consumption Trend ....................................................................................... 4

3. Strategies of the Conglomerates .............................................................................................. 53.1. Global and National Brand Sustaining Actions ............................................................... 53.2. Best practice for branding strategies ................................................................................ 6

4. Emotion AttributeOpportunities for Global and National Brand ........................................ 74.1. Sense Branding ................................................................................................................. 74.2. Romance Branding ........................................................................................................... 8

5. Consumption Patterns Post-GFC ............................................................................................. 8Reference ........................................................................................................................................ 9


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1.IntroductionThe race between Generic Brands and National Brands has continued for decades, debates

toward the value of products made from the former and the latter have draw attentions of both

researchers as well as consumers. The National Brands which is claimed to overvalue the

product itself while the Generic Brands is believed that a product can meet a high quality

requirement of the customers with a cheaper price. It is argued that bringing nearly same

experiences in terms of quality with lower price (30% cheaper); the Generic Brand will lead the

race to the customers choice.

Global Financial Crisis (GFC), happening in 2008, has led to the substantial consequences for

the global economy. Countless industries and corporations have been suffered from the

economic catastrophe. During the period, although there is a decrease in overall expenses, the

US economy witnessed a significant increase in the demand for Generic Brand products at

grocery store, supermarkets (Plunkett J.W., 2009). Whereas, the value of Top Global Brands was

estimated to remarkably reduce by approximately $67 billion in the end of 2008, according to

Brand Finance Press Release (2009).

In order to keep the loyalty of customers toward the Brand, many top tiers have been applying

many strategies to regain their Brand. The report will provide a brief explanation of the GenericBrand, and the effect of GFC on Global Brand, pointing out how the former can compete to the

latter. As following, the report will argue the strategies which the conglomerates have

implemented to recover their position and image toward the customers. Finally, there will be

discussion around the consumption pattern of customers toward the Generic Brand when Global

Financial Crisis is over.


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2.Generic or Premium Generic Brand become a smart choiceduring Economic Recession

2.1.

Generic Brand

Generic or Premium Generic Brand, also called store brand, which are products might be

manufactured similarly to named brand, or Global Brand. These products are considered to

bring the users equal experiences when it comes to quality. However, they tried to eliminate any

unnecessary cost such as packaging, advertising, and promotion. These Brands are usually found

in big store or supermarket such as Woolworth or Coles rather than small grocery store or

convenient store. It is also noticeable that, these Brands are not only package with the name of

the store but also distributed and sold within these stores to minimise the logistic cost, therefore,

it will be a difficult task for buyers if they try to find any Coles or Woolworth products in Seven

Eleven. As a result, with the same products, the buyers will find it much cheaper compared to

named Brands. While marketers of the multinational corporations are trying to integrate more

bonus value on their Brand name to capture more satisfaction of the market, the objective of

Generic Brand is to focus on the basic needs of the consumers.

2.2. Changes in Consumption TrendSince the GFC happened, consumers have become more careful on their expenses for their

living. Instead of going to restaurant, enjoying Starbuck coffee, people were cooking at home,

making their own coffee; the entertainment activities such as cinema, sport events are replaced

by internet and TV (Kotler and Caslione, 2009). Therefore, the value of the products will be

considered more than its differentiation; therefore, the consumers would make the decision for

the Generic Brands which provide equal quality compared to the Global Brand with much

cheaper price. As a result, the loyalty of the consumers toward the National and Global Brand

has been declining during GFC (Baumann C. & Valentine T. 2009). For example, Coca Cola

has lost 8% of their customers and 17% them tend to look for other products, whereas, Cheerios


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and Tylenol saw 65% of their loyalty customers buying alternative Brands cheaper (Edgecliffe-

Johnson, 2009).

The changes in consumption patterns towards the Global Brand and Generic Brand obviously

could be the result of the economic recession, however, the problems mainly come from the

products and how Brand was in customers perception. Strong Brands are determined by its

differentiation in which how they bring unique experiences for the customers based on the

attribute in its products and its image (higher level) (Keller 2008). In other words, when a Brand

is a strong Brand they are regconised among the society as a symbol of life-style or culture such

as Coca Cola. At this stage, product attribute dimension of the Brand can be ignored by the

influences of the emotion of the users. It is not weird when a Coke lover answers for their choice

on Coca Cola that because it is Coca Cola. They do not even pay attention of how much a bottle

of Coke is, or how taste it is compared to other products. Besides, the effect of the crowd needs

to be considered. When deciding to use products, consumers are strongly influenced by their

friends, family or what is the most popular product in the market. As a result, those who are

believed to be loyalty consumers of a Brand it is simply because they feel it is the best Brand

while they hardly try others. When these customers have to use other Brand as an alternative

choice because of financial or other reasons, which can offer them nearly the same experiences

with affordable spending such as Generic Brand, logically, the cheaper ones are obviously the

smart choice. However, if there are no difficulties when it comes to expenses, what is the most

determinant for the customers choices, Generic with standard values meeting the basic or

National ones with add values bringing unique experiences but with higher price?

3.Strategies of the Conglomerates3.1. Global and National Brand Sustaining Actions

When a promise fails to meet the expectation, the best practice is to make a better one.

Traditionally, rebranding is what multinationals have been trying to regain their customers

loyalty, which offers a promise beyond the classic brand element in terms of brand name, logo


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and slogan. Nevertheless, it is hard for customers to have faith in the assurances from a failure

Brand. As a result, a promise to improve or bring better products cannot reach the customers

confidence anymore.

Flashback Branding or Retro Marketing was taken into consideration during this trouble time.

Instead of newer and more improved products, the strategies remind the customers about the old

times when everything is simpler and familiar with them. McDonald lunched the commercial

in which a sweet tea brings the man back to his childhood when he used to have happy breakfast

with a glass of sweet tea with the theme song My Back in the Day Song, whereas, Pepsi

refresh everything by bringing customers back to the iconic time of colas during 1960-1970s

with the retro logo and melody, Forever Young (Hrabi, cited in Baumann C. & Valentine T.

2009). In the mean time, hospitality industries attempted to empower their position by pricing

strategies to survive the Global phenomenal during 2008. Top luxury hotels in Switzerland offer

discounts up to 50%, pricing in top ranked Sydney hotels made them not different from mid

range ones.

3.2. Best practice for branding strategiesAccording to Baumann C. and Valentine T. (2009), what the consumers tried to seek is not only

the real value of the brands but also the security and safety; therefore, products or services which

did not bring bonus value for the Brand should be eliminated but the strong Brand should be

remained and nurtured despite the economy changes. In fact, prices are nothing to do with the

changes in consumption patterns of the consumers from Named Brand to Generic ones. What

has made the fall of top Brand is the failure in the consumers expectations towards the products

value of the Brand. Therefore, it is necessary for a corporation to regain its image and

confidences of the Brand lover by adding bonus value at actual or emotion level rather than using

pricing strategies. Moreover, when a Brand accepts to lower its value, it will present to the

customers that they were lied. In terms of services, different from the tangible products, the

services cannot be stored. An airline cannot cancel the departure time when there are many

unoccupied seats. Similarly, hotel accommodations cannot wait for the recovery of the economy.


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Besides, traditional pricing strategy cannot be applied in service industry; therefore, the new

practice must be taken into consideration, accept lower profit to survive the GFC (Baumann C.

and Valentine T. 2009).

4.Emotion Attribute Opportunities for Global and NationalBrand

The structure of the economies has been changed over decades; services industry has proved its

increasingly important contribution to the GDP of the economy (Pine and Gilmore 1999). As a

result, the most recent changes come from the services delivered as a trigger to positive feedback

based on the emotion factors that create customers loyalty when they purchase products

(Baumann C. and Valentine T. 2009). Or in other words, customers sensation has been stronglyinfluenced by the services element contained in the products. The more a company can satisfy

the consumers by add-on values to draw their feeling toward the Brand, the more loyalty it can

collect from the customers.

4.1. Sense BrandingOne of the most powerful tools that many Global and National Brands are undertaking relates to

sound, smell, taste, vision. Jingle and Color is widely used in many popular Global Brands overtime which can be clearly seen in the advertising, logos, and packages of the products. Moreover,

sound, smell is currently creatively attached to the products to generate more emotion from the

customers. Many companies hired sound engineer for create a signature sound or melodies that

attract more customers attention. It would be fascinated if we were greeted by a voice with

James Bond styles when entering a car. Smell is also considered as a distinctive factor that

makes Global Brands more different from Generic ones. Cars which have a touch of scent are

usually highly considered by the customers (Baumann C. and Valentine T. 2009). However,

combination of the senses is the most powerful force to reach the highest level of feeling of

consumers. Apple is the obvious evidence for its successful in its marketing strategies. The look


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of Apple store, the unique smell and sound of i-products all bring the customers a memorable

experiences compared to other Brands.

4.2. Romance BrandingAccording to Park et al.(2009) and Oliver (1999) believed that in addition to attitude attribute,

the emotional bond between consumers and Brand plays a significant role as a predictor of brand

commitment and loyalty of customer. Moreover, based on Attachment Theory of Bowlby (1979),

Hemant and Siva also argued that the relationships between consumers and Brand are formed

accordingly on trust, dependability and consistency of response. Or in other words, the Brand

can raise the loyalty of consumers because of its dependability and consistency, always

available when they need. When they become accustomed to the products, the security and

safety feeling will be gradually established. The more these emotions are nurtured between the

Brand and the customers, the more rigid loyalty, also called trust, will be built inside the

customers perception. The case of Coca Cola in 1985 when the management of the company

attempt to change the flavor of the Coke is the most persuasive evidence. The emotion toward

the Brand of the Coke lover is so considerable that the company was forced to go back the

simply Coke taste. This is also the explanation for the successful of retro marketing rather than a

promise with new and better products. When there are connections between consumers and

Brands, the emotion of those products are still remained. However, good or bad depends on how

these Brands, especially Global and National Brands, can take the advantage to persuade the

customers again.

5.Consumption Patterns Post-GFCIt has been a while since the GFC boomed, however, its potential consequences which have a

great impact on the health of Global and National Brand. During this trouble time, Generic

Brand has drawn attention widely because of its quality and affordability. Many researchers

believed that the Generic Brand has been increasingly influential on the consumers choice even

after GFC. Therefore, many managers have been sought a best approach for their marketing plan


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that promotes the consumers confidence such as retro marketing and branding tools which

attack the emotion of Brand lovers. In fact, the Generic Brand has been existed for a long time, if

there are a new trend in consumption, it must have been happened. Moreover, in order to provide

best prices for the customers, the added values of these products have been minimised. It can be

seen clearly that most of the home-brand products cannot be found in 7 Eleven or other

convenient stores.

As mentioned, the shift of consumers choice is because of not only the pressure of the economic

crisis but also the failure in Brand promise toward the customers. However, some home-brand

has positioned its name in customers perceptions and reach their acceptance such as Woolworth

Selected which offers shoppers a premium quality as the Global Brand but with a cheaper price.

In a nutshell, it is quite pessimistic when claiming that the Generic Brand will rise in the future

because its marketing strategies focus on different targets compared to Global and National

Brand.

Reference

Brand Finance Press Release < http://www.brandfinance.com/news/press_releases/economic-

downturn-wipes-67-billion-off-top-global-brands-valuation>

Baumann, C. and Valentine, T. 2009,Marketing In Focus, Pearson Education Australia, 2009

Kotler, P. and Caslione, J.A., 2009, Chaotics: The Business Of Managing And Marketing In The

Age Of Turbulence, AMACOM, NY, USA

Pine, J. and Gilmore, J., 1999, The Experience Economy, Harvard Business School Press, Boston

Plunkett, J.W., 2009, Plunkett's Food Industry Almanac 2007: Food Industry Market Research,

Statistics, Trends and Leading Companies,Plunkett Research Ltd., TX, USA
http://www.brandfinance.com/news/press_releases/economic-downturn-wipes-67-billion-off-top-global-brands-valuationhttp://www.brandfinance.com/news/press_releases/economic-downturn-wipes-67-billion-off-top-global-brands-valuationhttp://www.plunkettresearch.com/Industries/FoodBeverageTobacco/tabid/203/Default.aspxhttp://www.plunkettresearch.com/Industries/FoodBeverageTobacco/tabid/203/Default.aspxhttp://www.plunkettresearch.com/Industries/FoodBeverageTobacco/tabid/203/Default.aspxhttp://www.brandfinance.com/news/press_releases/economic-downturn-wipes-67-billion-off-top-global-brands-valuationhttp://www.brandfinance.com/news/press_releases/economic-downturn-wipes-67-billion-off-top-global-brands-valuation

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Changes in Consumption Patterns During the Recession Time - From Global and National to Generic Brand