The power of Own Label has once again been demonstrated by Sainsbury’s, who’s Switch & Save campaign is rumoured to have decimated the sales of key consumer staples. Many brands are reporting sales drops of 50% or more.

So, what can brands do to fight back against this aggressive strategy?

Switch & Save has been credited with helping Sainsbury’s grow ahead of forecasts and beat the City’s view of its performance.

200 lines in-store have been optimised for taste and have been directly targeted on-shelf against branded category leaders. Sales data shows that Sainsbury’s customers have been switching to own label and finding a highly likeable and cheaper offering.

What can brands do against this threat, and what does consumers behaviour tell us about the equity and importance of brands?

Making the brand relevant again

One of the biggest learnings from the Switch & Save campaign is the fragile relationship between consumers and brands. Over the past 25 years marketers have discussed the importance of Brand Value and Equity, yet this simple campaign by Sainsbury’s shows that even for the biggest brands in the country, equity counts for little against worsening economic news, deep price cuts and good product performance.

Re-building relevancy, differentiating the brand and in some cases finding a new reason why your product should be chosen against the own label competition is critical if brands are going to be able to survive.

Going into 2009 brands are going to come under yet more pressure. Protecting your market share will require product improvement, pack re-designs and marketing campaigns to build back equity. For many brands the tempting route will be to cut prices. Longer term, this will harm brands further.

Leading the fightback

Consumer behaviour is changing fast and in the face of this, brands need to think and act radically to protect and grow their share. It’s time to make bold and decisive moves to re-energise your brand. Finding a place in the consumers shopping basket and in their lives will be critical to survival.

Doing nothing is not an option!

Getting your house in order

Products must be re-formulated, taking out expense, improving taste and overall product performance. It’s a delicate balancing act which can quickly address the areas in which the product under performs. In turn this will drive repeat purchasing.

But, getting trial is also needed. Packaging must be evaluated. Is it optimal, does it standout and improve brand equity and what can be done on pack standout, shelf ready packaging, etc? Packaging is a vital element of getting sales at shelf, as the Sainsbury’s campaign clearly demonstrates.

Price has to be considered. With most brands using longer and deeper promotions, developing a marketing plan which encompasses price promotions with above the line advertising can deliver a much needed boost to brand volumes.

Innovate to differentiate

Is it time to launch more differentiated products to build your range, extend the product offer, or provide a new offer which tackles Own Label head on? For instance, would Heinz benefit from launching its own value offer to provide brand reassurance at a much cheaper price to address own label, yet preserving the position of Tomato Ketchup?

Developing a value line or a premium line of products could protect the brand in the longer term.

These are challenging times for Brands. As other retailers copy Sainsbury’s success, the need to differentiate and rejuvenate the roles brands play in consumer’s lives will escalate.

The Oxford Research Agency is one of the UK’s leading food and drink research agencies, optimising current products and developing new NPD for tomorrow’s world.

Have any comments? Give Chris Sinclair a call on 01865 728272 or email chris.sinclair@tora.co.uk