Woolworths Ditches Homebrand to Increase Sales

Don’t judge a book by its cover… this idiom has been told to us since we were knee-high to a grasshopper. But face it! We’ve done it all the time, knowingly or unknowingly. We perceive the value of a product based on its packaging. Small visuals, such as image choice and colour, say a lot about a product, and most consumers, being super busy, buy products based on their gut impression, rather than reading the fine print on the product package. From a marketing point of view, that first impression needs to be a positive one, and marketing research, by means of holding focus groups or filling out surveys, can help achieve that.

Source: Google n.d.

Source: Google n.d.

Types of Marketing Research and Its Importance

Marketing research uses two types of data: primary and secondary. Primary data includes information that is obtained directly from potential customers. This type of data can either be qualitative (for example, focus groups and in-depth interviews) or quantitative (for example, surveys and experiments). Secondary data includes information that is obtained through reports and studies of other organisations.

Marketing research should be done on a regular basis to know your competitors, their strengths and weaknesses, to know your customers and their preferences and to know the existing gaps in the market. For example, Woolworths introduced a new program known as Customer Talkback. This program involves conducting customer focus groups around the country, wherein customers provide frank feedback directly to the store team. Based on the research done by Woolworths, they learnt that customers perceive their homebrand products to be of cheap quality. This is mainly due to the familiar, yet simple red and white packaging of homebrand products. Customers correlated plain packaging and low price with low quality. In contrast, customers perceive Aldi’s private label products to be of reasonable quality owing to the packaging being similar to nationally branded alternatives.

Source: Google n.d.

Source: Tucker 2016

So What did Woolworths do?

To fight these perceptions, Woolworths has renamed over 900 homebrand products as ‘Essentials’, after investing 33 years into making homebrand one of the top-selling generic brands in Australia. The supermarket giant aims on improving perceptions of the brand using new packaging and simultaneously maintaining or lowering price.

Source: Google n.d.

Source: Google n.d.

Admittedly so, just changing the labels and packaging will certainly work. This is because the human brain can be influenced easily. A lot of sensation is derived from the packet when we eat or drink. For example, Coca-Cola is extremely susceptible to consumer perception. (Well, they ought to since they have been selling brown sugar-water for more than a century at a high price.) However, in 2011, they tried to restage its polar bear mascot by changing the design of the Coca-Cola Classic cans from the usual red to a wintry white. This was a huge mistake. Within a month, they had to abandon the project and revert to red. This was because of three main reasons:

  1. Many customers complained that the drink tastes different when in a white can.
  2. Coke’s most ardent fans found the change in colour offensive.
  3. Some consumers confused the packaging with Diet Coke’s similar silver cans.
Source: Google n.d.

Source: Google n.d.

Although this change wasn’t as big a mess as the New Coke fiasco in 1985, it did induce the same kind of sentiments among the brand’s customers, which could have been avoided had the company done a thorough marketing research before releasing the newly packaged drink in the market.

Connecting Shape and Colour with Taste

Charles Spence, a psychology professor at Oxford University, has performed numerous experiments on multisensory perception and made several discoveries. He observed that strawberry mousse served in a white container tastes 10% sweeter than that served in a black container. He suggested that colours and shapes influence the taste of food, such as red makes food taste sweet whereas blue makes things taste saltier.

Thus, Woolworths’ simple strategy to revise their packaging can make such a huge difference. Packaging may not matter as much for an apple or a dinner roll as it would for products that have no real shape of their own, such as canned food, beverages and spreads — the products that are usually homebrand. To be honest, the quality of cheap generic brands has often been good all along. It’s only because of the unappealing packaging we’ve had bad experiences with them.

Woolworths is investing over $600 million into decreasing grocery prices and enhancing service in stores so as to recover market share lost to Coles and Aldi as well as to revive sales growth, which has been dropping for three successive quarters. We should probably wait and see if their simple trick of switching labels works.

Claire D’mello

216059831


References

Bhasin K 2011, People Are So Outraged At Coca-Cola’s Holiday Cans That It’s Abandoning Them After Just One Month, Business Insider Australia, retrieved 22 August 2016, <http://www.businessinsider.com.au/coca-cola-abandons-white-polar-bear-can-2011-12?r=US&IR=T >.

Burns M 2011, Review: 2011 Coca-Cola “Arctic Home” White Cans, photograph, BevReview, retrieved 22 August 2016, <http://www.bevreview.com/2011/12/09/2011-coca-cola-arctic-home-white-cans/ >.

Mitchell S 2016, Woolworths makes Homebrand homeless in private label shift, The Sydney Morning Herald, retrieved 22 August 2016, <http://www.smh.com.au/business/retail/woolworths-makes-homebrand-homeless-in-private-label-shift-20160327-gns0p2.html >.

Murphy J 2016, Why Woolies had to kill Homebrand, photograph, news.com.au, retrieved 22 August 2016, <http://www.news.com.au/lifestyle/food/eat/why-woolies-had-to-kill-homebrand/news-story/b62b5a91c9a41209681f554180745225 >.

Oxford Martin Programme on the Future of Food n.d., Charles Spence, University of Oxford, retrieved 22 August 2016, <http://www.futureoffood.ox.ac.uk/people/charles-spence >.

Start your own business 2016, Conducting market research, entrepreneur press, retrieved 22 August 2016, <https://www.entrepreneur.com/article/217388 >.

Stock Illustration – Market research background concept n.d., photograph, CanStock Photo, retrieved 22 August 2016, <http://www.canstockphoto.com/market-research-background-concept-6138267.html >.

Strategy and Objectives n.d., Woolworths Limited, retrieved 22 August 2016, <http://www.woolworthslimited.com.au/page/Who_We_Are/Strategy_and_Objectives/ >.

Tucker H 2016, Woolworths is killing off Homebrand to fight Aldi, photograph, Business Insider Australia, retrieved 22 August 2016, <http://www.businessinsider.com.au/woolworths-is-killing-off-homebrand-to-fight-aldi-2016-3 >.

Woolworths Supermarket Bankstown, Centro Bankstown n.d., photograph, Sandrick Project Directions, retrieved 22 August 2016, <http://sandrick.com/project/woolworths-supermarket-bankstown/ >.

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