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We often hear the word “differentiation” tossed about in the private brands industry. In most cases, differentiation means retailers offering private branded products — consider Publix’s premium ice cream selection — that consumers can’t get anywhere else.
But what about using transparency — a hot topic among consumers if there ever was one — to differentiate?
According to data released recently by Chicago-based Label Insight, a company that specializes in product transparency data, many consumers are confused about the ingredients in their food products after examining their food labels. Label Insight recently surveyed more than 1,000 consumers on feelings of confusion with food product ingredients and labeling, the impact of this confusion on purchasing behavior and how technology solutions might alleviate concerns.
Here are three key points that Label Insight found in its research:
• 35 percent of those surveyed say they do not buy products when they find the ingredients on their labels confusing.
• 60 percent of those surveyed say they trust a brand less when they see ingredients they don’t recognize or find confusing.
• 64 percent are so turned off by the confusion created by some product labels that they not only consider switching brands, but also are willing to pay more for brands whose ingredients they understand.
“Consumer demand for product transparency is on the rise, and when brands and retailers fail to deliver, it erodes brand trust," said Kira Karapetian, vice president of marketing for Label Insight.
Many private brands are known for offering equal to or better than the national brand equivalents at a lower cost. If these same private brands decided to offer easier-to-understand labels on those products, they would be offering consumers two good reasons to buy their store brands — lower cost and friendlier labels. Heck, retailers may even be able to charge the same amount as NBE products in some cases if consumers are willing to pay for them, increasing their margins as a result.
Retailers offering premium private brands could also benefit by offering easier-to-understand labels, which would give consumers two good reasons to spend more on them — they are premium and they have friendlier labels.
Label Insight’s survey also found that 83 percent of consumers feel confused at least some of the time about ingredients listed on food package labels; 45 percent are concerned when they eat food products that contain ingredients that they don’t understand; and that while package claims of “natural,” “healthy” and “clean” should help inform consumers, only about one-third of Americans completely understand what those claims mean.
Clearly (pun intended), transparency can equal distinction.
(The complete results of the Label Insight study can be found at Label Confusion Study.