Christian and Sonya raised an interesting conundrum with their question in reply to my last post. “In a category like breakfast cereal, are the manufacturers hurting themselves by having so many brands and varieties within those brands?” There are two aspects to this from a retail marketing and consumer behaviour perspective. The brands are doing themselves a favour (with an approach that was started by the cigarette manufacturers many decades ago): by proliferating the number of brand options you increase the likelihood that someone will choose one of your brands (and they basically don’t care which the customer takes so long as it’s one of theirs). This makes it much, much harder for a new entrant to take market share away. The retailers however are not helping their cause. It’s been found in one study of European supermarkets, that those who stock a smaller ranges sell more in total than those that stock […]
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