Consumer Recession Choices Mean Game-On for Branded CPG Companies

During the most recent economic downturn, 18 percent of consumer-packaged-goods consumers bought lower priced brands. Of the switchers, 46% said the cheaper substitutes performed better than expected. As a result, 34 percent of the switchers said they no longer preferred higher priced branded products, and an additional 41% said it was "not worth the money". This is all from the McKinsey Quarterly and you should read it, but The Atlanta Advertising Blog thinks there is something very interesting here for the P&G's of the world as well as Atlanta Advertising Agencies.

As the economy recovers, a great number of consumer will be in-play. Will premium brands be able to make up ground lost? How will they do it? In many CPG product categories like cough syrups, with government regulated active ingredients, it is nearly impossible to get a real or physical product difference. So, How can companies build consumer equity as the market turns around?

Consumer equity is made up of value equity, brand equity, and relationship equity. The private label players own value equity. So as companies try to win back their previous consumers they have to concentrate on building brand equity. Brand Equity can be built through brand awareness, image ads, brand attitude, brand ethics, ethical corporate behavior and free samples and promotion. As CPG companies look at their share being eroded on price alone will they dare forgo the demise of chasing value equity vs private label or will they realize the only way to compete is through building brand equity. This should play out in the next 24 months and you'll see some premium brands recover and others falter. I'll bet the successful ones chase the brand equity portion of the consumer equity equation.