Product Recalls from China - How Will They Affect Store Brands?

What exactly is a brand name worth? One of the major marketing stories of the '90's was the rise in market share for store brands. For decades, these store brands (such as Kroger soup, Sam's Choice etc.) were the last choice of cash strapped customers who had a family to feed. Traditionally, store brands were of poor quality and produced by second tier manufacturers. However, things began to change in the late 80's and early '90's. Thanks to earlier acceptance of quality management by Japan in the 1960's, these new practices would soon change manufacturing in the United States. First, American carmakers adapted to the new, zero defect production model, followed closely by corporations of all types.

The growth in uniform quality methods had an unintended consequence; it became more difficult to find a manufacturer who supplied the poorly crafted products of the past decades. Those that had refused to change were out of business. The quality difference between first and second tier products narrowed significantly, forcing many American consumers to challenge their personal loyalties for brand products that were much like their no-name counterparts.

A brand is generally considered as an emotional connection between the consumer and the company. Now, in a competitive marketplace, consumers were forced to put a price on their loyalty for brand name products such as Campbell's Cream of Mushroom soup, for example, compared to Kroger's lower-priced alternative. For the discerning palate, different ingredients might be noticed, but not a drop in overall quality of the soup.

With time, the quality of all store brands greatly increased. It was a welcomed change for these previously overlooked products. Gradually, more and more consumers began to realize that the major difference between Kroger's soup and the Campbell's brand was the price, and market share began to shift to the no-name labels.

However, the story is not over just yet. A threat to the new success of store brands comes from the current problems with food manufacturers in China. Many recalled products were manufactured under the store brand of discount chains. This leaves consumers with an unanswered question. Where, exactly, does their store brand come from? Uniform quality may have made it more difficult for consumers to justify a higher price for a branded product, but it is very easy to pay more to ensure your family's health and safety.

Brand loyalty is taking on a completely new dimension.