Leading the move is FMCG giant Procter & Gamble (P&G). Internationally recognised as a virtually untouchable brand originator, the company invests more than $2 billion a year in R&D - nearly twice that of Unilever. In the US, P&G has faced particularly formidable competition from the private label offerings of large retailers and supermarket chains during the last decade, a trend that saw marked acceleration during the recession. Sales of Target’s own label products achieved an average annual growth rate of 15% from 2003 to 2008, while stalwart Wal-Mart’s 5 500-product-strong “Great Value” brand has gained substantial ground across the country.
To help keep private label incursion at bay, P&G has maintained a robust investment in product innovation and development of different versions of its existing products at different price points. The company offers at least two tiers across many product categories, an in-house diversification strategy that offers variety, secures loyalty – and ensures for its creator an all-weather game of play. For example, the company has recently seen its value diaper brand Luvs stealing share from sibling premium brand Pampers, which is also P&G’s biggest brand and one of its most global businesses.
In the US, the current consumer bias towards basic version offerings is reflected in increased advertising of ‘commonplace’ mealtime products. According to global research agency, TNS Media Intelligence, advertising for Heinz ketchup was up 967.1 percent in the first half of last year, while that of Hellmann’s mayonnaise and Jif peanut butter increased 165.6% and 39.8% respectively.
For some critics, however, the sustainability of basic line launches is questionable. For them, basic product innovation is contextually – not philosophically - driven and, as such, represents a strategic move rather than a business policy.
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