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A new study by Market Strategies International, “CPG Qualitative Research: Exploring Private Label vs. Branded OTC” April 2013, finds consumers are strongly aware of specific national brands as well as private label brands in all OTC categories studied in the report.
Most consumers have experience and are comfortable with private label, but will purchase national brands if they are in unfamiliar territory or when they are not willing to risk poor efficacy or onset of action (e.g., for conditions such as diarrhea or a cold).
The study also found that many believe private label is made by national brand manufacturers. While respondents aren’t certain, a main school of thought is that OTC medications are made by the same manufacturer regardless of national brand or private label distinction; another belief is that private label is made outside the US (which creates skepticism around quality), or by “generic manufacturers” that just make the same thing for all private label medication.
The study found consumers tend to identify national brand with being eye-catching, expensive and reliable, and identify private label with simplicity, being functional, and cost saving. Private label is generally believed to be as efficacious as national brand, particularly for those who believe the same manufacturer is producing both private label and national brand.
However, there are exceptions, including Cold and Flu and Excedrin Migraine (of which shoppers are extremely loyal to).
Some individuals acknowledge that they believe national brand and private label likely are the same but still believe national brand will produce better results; there is also a segment of buyers who are brand loyal and suspect private label efficacy.
How private labels perform across categories is important as well, the study finds. Once someone has tried a private label product of any type and has had a positive experience they are more comfortable purchasing private label in the future and in other categories; efficacy is perceived as equivalent.
Social media and informal referrals are also important in creating trust in a product.
While saving money is a strong driver of purchasing private label OTC products, green shoppers and moms are the drivers of spending more.
The study shows consumers are sometimes willing to pay a premium for products that are socially responsible and environmentally friendly, while moms who pay close attention to ingredients are willing to buy whatever they think is best for their kids, regardless of price.
As to where consumers are shopping, the study found convenience is key. A major driver for buying private label is the proximity of the store to either home or work. If consumers have a regular shopping list and regular destinations (Target, Sam’s Club), they will shop for OTC meds used routinely, such as pain medication. Buying private label is often acceptable or preferred when preventing an additional shopping trip or when saving money on OTC that is used in bulk, such as allergy medications.
However, there are certain stores consumers avoid for both national brand and private label alike. These stores include discount stores, particularly dollar stores.
Product recalls have also influenced purchase behavior out of necessity. Consumers are forced to purchase something else when their national brand is pulled from the shelves. In some cases, recalls have not damaged a brand’s reputation, particularly if consumers feel they are being given information and being told the truth about the recall.
In other cases, product recalls have lasting effects. For example, many remember when capsules were tampered with and the contents replaced with poison. Despite acknowledging safety innovations and sealed packaging, most still do not purchase capsule-form OTCs at all.
There is also a perception that national brands are the only ones who have issues that require a recall. This will aid in private label’s growth, the study suggests.
Market Strategies International conducted in-person focus groups March 20-21 to complete this study. Qualified participants fell between the ages of 22-80, bought pain relief, cold and flu or digestive relief products for themselves or others, and had personally purchased private label OTC items in the past six months.