PRODUCT DEVELOPMENT AND PROMOTION

Brands themselves means a large number of considerations and facets to their use. These changes have meant some new food product development. A brand can see through co-partnering and such they can expand.

One of the problems may be that brands themselves are suffering an identity crisis! What is a butter finger, a skippy --- show candies and products in different forms?

Part of the affect on brands is the change in the supermarket itself. Private label (Loecke, J. 1994. Inside the News. Succeeding in a crowded marketplace. Prepared Foods 163(9):13.) has seen its supermarket share increase to 20% as of 1994. However, nationally 85% of the food products sold are name brands. There are some (Anonymous, 1997, April 17, 1997) that feel the increased use of supermarkets to sell prepared food, deli food, "instant meals", will enhance the ability of the supermarket to market their own private labels.

There does appear to be a resurgence of house brand purchasing and private specialty brands. This is surprising if one looks at the changes in social values over the last 50 years. The purchase of a house brand over national brands appears to be decided by price. At one time private labels in a variety of areas was limited. For example, before the early 1990's (Gatty, 1991) only about 3.5% of the RTE cereals were private labels. In 1989 their market share increased to 33% of the market share. This is likely due to the dramatic price differential. We continue to see this expanding. The establishment of a brand name may be advantageous to a company; however, it has its risks. Schuster (2000, July) has found that self-branding, in-house branding is an advantage in the foodservice sector.

The private-brand is changing from generic-to-store brands to a premimum brand. More recently, Roberts (2000, Sept.) reported an increase of private-label foods. The private-label food and beverage market is placed at $48.6 billion or 15.4% in 1999 in the supermarket. An example, is Village Market convenience foods by Boston Market. They are taking advantage of the increase in the use of prepared foods from customers which have no loyalty, just a desire for high-quality foods.

The 15-20% use of private brands still means that 80% of the stores still use national brands. Lisa McCue (Roberts, 2000Sept.) of the Grocery Manufacturers Asswocation says "Manufacturers' brands have the promise of higher quality on a consistent basis, which is not always the case with private labels. Manufacturers are not complacent but are looking for ways to provide better value for the consumer." The values of the private-label categories can be seen by the top 10 private-label categories.

The growth from 1998 to 2000 can be seen by the following data (Roberts, 2000Sept.)

Erdem (1998) studied the affect of brand name perceptions, (umbrella branding) across several products, including product categories. This transference of brand name to new products is to help with conveying a quality perception to a new product in which they may not be certain about product qualities. Certainly, with the brand has a connotation of quality the consumer may assume the extension will have that quality. The new Oreo cereals are just such an example. Nabisco lent their brand name of Oreo to Krafts&Post for a cheerio like product. In this instance both firms are trying to develop a quality synergy based on the perceived quality and "like" of both brands with two established products. Drdem (1998) discusses advantages and disadvantes. They reported research that indicated that experiences in either food category could affect both products. The problem is, if the extension does not live up to the expectations, the brand may destroy the image of the other products in the brand.

Note the Safeway brand. Increasingly grocery stores are developing their own private label or brand (Anonymous, 1999; Neff, 1997). They are hoping that they will be able to market a high quality low cost concept. It is used to help in differentiating their stores and enhancing their profit margins. However, developing such a brand is initially expensive. There is an inherent problem with a store developing a broad spectrum of private labels. If there is a problem with one food it may spill over to all the private labels. However the advantage of private labels can be seen with the example of K-Mart (Neff, 1997). K-Mart has developed their private label, American Fare. They can sell a similar product 20% below competing brands, with margins for K-Mart 4% higher. Generally, it has been found a major disadvantage of private labels over branded products, is (Fusaro, 1995) they do not come out with new food products.

In 1993, Mancini reported that the presentation of new products, line extensions and R&D in product development varies with the companies. They reported the following

Brand extensions are an important part of product development. During the late 80's and early 90's, line extensions ranged from a low of 30 new product extensions to over 60. During 1990(Springen and Miller, 1990) it was estimated that over 60 percent of the 5,779 new products introduced were brand extensions. That is, they were improved formulations, new sizes or new packages for existing brands. Ogiba has indicated that as much as 87 percent of the new products in the market place are really a variation of an existing product. 13 percent of the new products are truly new with less than 1% of those products were a new category of product from their existing line. Swientek (1997Mid-April) has reported that in Pillsbury, 21% of the revenues are from products five years old or less. Of these products introduced these past five years, approximately 3/4 of them are still in the market and 56% are successful. How does one judge if a product is successful? Pillsbury uses a criteria of greater sales than 100,000 cases. What are the affects of brand name and extension? Examples are linked here. Whether to do a brand extension is difficult to know. Nabisco chose to do a whole new brand when they did Snackwells as opposed to linking it to Oreo or Ritz crackers. It worked.

One other trend is the co-branding or co-parterning of new products. For example combining a variety of products and/or selling them together. We see this increasingly with coupons.

A whole other area of brands are the development of orphan brands. Orphan brands (Davidson, 1998) are ones whose owner has decided it no longer a core brand. They do not do more product development, advertising or spending. Orphan brands occur because the company may not think it is a good fit or is not considered to be a priority. Some brands which have been revitalized by Aurora Foods and Van De Kamp's, Duncan Hines, Log Cabin, Aunt Jemima, and Mrs. Butterworth.

Brands and Associated companies

Anonymous. 1999February. Quality focal point of private label vs brands. Milling and Baking News 77(51): 7.

Bucklin, R.E., G.J. Russell, and V. Srinivasan. 1998Feburary. A relationship between market share elasticities and brand switching probabilities. Journal of Marketing Research 35: 99-113.

Davidson, G.L. 1998December 15. Growing orphan brands at Aurora foods. Milling and Baking News 77(42): 17.

Demetrakakes, P. 1998July. Opening doors for orphan brands. Food Processing 59(7): 20.

Erdem, T. 1998August. An empirical analysis of umbrella branding. Journal Marketing Research 35: 339-351.

Friedman, M. 1994Mid-April. The Death of the Last Brand. Prepared Foods : 39.

Fusaro, D. 1995. Brands are back! Prepared Foods 164(1):28.

Gatty, B. 1991June. Penny-pinching puts squeeze on national brands. Prepared Foods 160(7): 15.

Goldberg, R. and D. Swander. 1994December 20. Brands. Milling and Baking News 73(43): 37.

Gurhan-Canli, Z. and D. Maheswaran. 1998November. The effects of extensions on brand name dilution and enhancement. Journal Marketing Research 35: 464-473.

Kotcher, R. 1993. Building brand loyalty with public relations. Food Technology 47: 106.

Neff, J. 1997March. Supercenter power. Food Processing 58(3): 31.

30. Roberts, William A. Jr. 2000September. More than a name. Prepared Foods 169(9): Russo, J.E., M.G. Meloy, and V.H. Medvec. 1998November. Predecisional distortion of product information. Journal of Marketing Research 35: 438-452.

Simonin, B.L. and J.A. Ruth. 1998. Is a company known by the company it keeps? Assessing the spillover effects of brand alliances on consumer brand attitudes. Journal of Marketing Research 35: 30-42.

Updated: Monday, August 27, 2007.