The Mintel headline claims “Private label gets a quality reputation, causing consumers to change their buying habits.” The truth is that behavior lags far [...]]]> Mintel, a global market intelligence company, recently released a study touting growing consumer acceptance of generic, private label, and retailer brands. Yet what people say does not always affect what people do.

The Mintel headline claims “Private label gets a quality reputation, causing consumers to change their buying habits.” The truth is that behavior lags far behind though. Mintel found that 44% of shoppers believe the quality of store brands has improved over the last five years.  Only 19% of shoppers believe brands are worth paying more for. Between 56 and 62% of shoppers (depending on category) believe there is no quality difference between name brand and store brand products. If people acted on their beliefs, store brands and generics would have a 30%+ market share in most grocery categories.

Actual sales figures tell a different story. According to Packaged Facts published in Packaging Digest, private label accounts for only 17% of total food and beverage retail sales in the United States. Recession pressures on shopper budgets has driven an increase since 2008 of 7% for food and 1% in beverages, yet generic/private label/retail brand share of market tracks nowhere near shopper opinions. While some categories, like sugar, are perceived as commodities with generics having a greater market share, and other categories, like milk, have few dominant national brands, most categories are still dominated by national name brands.

Marketers know that behavior is only partly driven by stated opinion. Habits, specifics of the situation, other opinions, marketing messages, and dozens of other influences impact buying decisions. Having an increasingly positive opinion about generic brands and store brands does not mean shoppers buy more of them.

More than Repainting Planes Merging airline brands is not so much about [...]]]> Airlines merge, but their brands do not. With the rumored merger of American with Jet Blue, the finally consummated deal between United and Continental, and Southwest’s acquisition of AirTran, the airline industry is facing some big brand issues—with the negative fall-out hitting their customers.

More than Repainting Planes
Merging airline brands is not so much about what name to keep or what logo to paint on planes. It is about being profitable and maintaining market share. A merger that looks great to accountants and lawyers on paper may utterly fail if management doesn’t get the brand right.

Airline Brand = Flying Experience
Airline brands are about the flying experience first and foremost. A good experience is what generates profit and repeat business. It is exactly the flying experience that suffers when airline brands merge. Getting fliers from departure to arrival is a complex process. From buying a ticket, to picking up bags, to walking out of the terminal, fliers face dozens of opportunities for airline slip-ups:

• Computer systems that book flights, manage fare setting, schedule planes, and more are hard to synchronize. Even something so simple as an operating system can be a problem as Continental is on Windows 7 and United uses Vista. Southwest has a much admired customer relationship management system that AirTran could only dream about.

• Loyalty programs for earning frequent flier rewards have different mileage earning systems, award levels, black-out dates, upgrade policies, and amenities. AirTran and Southwest award mileage in different ways. Southwest doesn’t have a first class and can’t offer upgrades. Because of the Continental United merger, Continental frequent fliers will no longer be able to gain entry into club lounges with the AmEx Platinum or Centurion cards and they won’t be able to use AmEx miles for flights on Continental or United.

• Crew operations vary wildly from how flight attendants welcome travelers onto flights to the uniforms they wear. That Continental has a customer focus and ranks number two in customer satisfaction and United has a history of adversarial employee-management relationships and ranks last says something about different cultures and priorities. Southwest has a distinctive in-flight personality and invests in training carefully trained crew. Air Tran does not.

• Planes and configurations are another area of difference. Jet Blue offers all first class seating, while American offers traditional first and coach classes. Continental’s 777 seat 285 people. United 777s seat only 253. Systems selling tickets on routes served by 777s  after the merger better know which legacy airline plane will fly that route or people could end up without a seat.

Clashing cultures. Divergent procedures and policies. Systems in conflict. Strange planes in the fleet.  It is no wonder that the customer experience suffers in an airline merger. The carefully choreographed ballet of the smooth and positive flight experience more often resembles the chaos and pain of the mosh pit. When that happens, the customer is likely to waltz off with a competitor. And that puts the  financial promise of any merger in jeopardy.