Generic brands and product differentiation strategies

Abstract

Generic or own brand products were initially only lesser expensive copies of the branded label alternative, but nowadays, pricing alone is not enough in order to survive in the Fast Moving Consumer Goods (FMCG) or Consumer Packaged Goods (CPG)markets. With this in mind manufacturers of generic brands have adapted to this rapidly/ngrowing niche by investing in design and marketing during the initial phase in order to be perceived as having a quality product comparable to that of the branded products. In addition, they have gone further ahead with a second phase and resorted to innovative/nproduct differentiation strategies and even pure innovation in many cases. These strategies have granted generic brands constantly increasing market shares and a position of equals relative to national brands./nUsing previous analyses and case studies, this paper will provide conceptual and empirical evidence to explain the surprisingly fast growth and penetration of generic supermarket brands, which in their relatively short lifespan, have grown to rival the historical market leaders, the branded products. According to this analysis, the main conclusion is that the growth in generic brands can be explained not only by price competition, but also by the use of innovative product differentiation strategies.