Strategic brand decisions in the food market: an empirical approach

Abstract

The food market is a sector characterized by high levels of competition. Brands are strategic assets which help companies acquire a competitive edge over the long term, as they enhance products with the power of brand equity. Retail brands are derivatives of a brand which embody the personality of the retailer: they are cheaper than national brands and are currently repositioning themselves within the market, becoming an alternative to national brands. To delay the advances of retail brands, national brands may adopt one of four identified strategies: a do-nothing strategy, which is characterized by inactivity in the face of competition, or by reacting with a price adjustment, a quality adjustment or a portfolio adjustment. The aim of this work is to understand what the best strategy for national brands should be to counter the strong advances made by retail brands in the food sector. The work was carried out in two steps, both employing questionnaires. The pre -phase was conducted using a semi -structured interview of academics, retailers and manufacturers in the marketing and/or branding fields. The field work involved sending a questionnaire by email to important food companies belonging to a particular Portuguese association. The results obtained were conform with literature on the theme. Respondents upheld the belief that quality is a very important strategy for competitive advantage, and that price can be perceived as an indicator of quality: the higher the price, the higher the expected quality, while lowering the price to compete with retail brands is an unaffordable strategy to maintain. Moreover, respondents also pointed to the launch of fighter brands as the main strategy in combatting retail brands. Correlations have also been found between the strategies.