Asst Professor, University of Western Australia
Woolworths is ditching its Select private label range. It intends to launch a new brand for a more focused range of products that promises more bang for the buck. The move comes after Woolworths decided in March to axe its Homebrand label as part of its strategy to compete with Aldi.
The move makes sense, but will likely do little to restore consumer trust and sales growth.
Management guru Michael Porter has long argued that products need a clear positioning in consumers’ minds as either special and expensive or convenient and cheap. Woolworths Select was neither, stuck somewhere in the middle. This positioning was confusing for customers.
But will fixing this problem make a difference, and perhaps even keep growing Teutonic supermarket force Aldi at bay?
Unlikely. After all, similar efforts are only baby steps towards what truly distinguishes growing companies: the ability to make consumers’ lives simpler. Think of Uber, Netflix, Amazon, but also Aldi. That’s the common denominator.
And yet, research shows that most companies keep confusing the gobbledegook out of us. A lot has been written about how consumers get more than they want, and how more product choice often makes us less happy.
But consumer confusion extends to other tactics too, like pricing and discounting. Shoppers increasingly ask questions such as: why are some products almost always on special (while others never are)? Do half price offers mean that we usually pay twice as much as we should?
At best, discounts have become meaningless. While discounts were used successfully in the past to move excess merchandise, they have become ubiquitous and permanent, providing little incentive to respond. It’s a bit like the guy in the audience of a stadium that stands up to see more: it’s an effective tactic so long as not everyone else is standing up too.
Another major concern that emerges is product claims and packaging; for example, most consumers do not know the difference between ‘Product of Australia’ and ‘Made in Australia’.
Also, products claiming to be ‘natural’, ‘real’, or ‘healthy’ are usually hiding behind meaningless terms, undefined in labelling law and merely meant to persuade rather than inform people. The result is ever more confusion.
So what should brands do to simplify the consumer experience? Ironically, the answer to this question is not simple. It takes an awful lot of work to make things less confusing. An app that you visit once in a while and find easy to navigate may be the result of years of painstaking work, with many difficult decisions made behind the scenes about what should go where, and just as importantly, what to leave out.
Companies should start making every aspect of their product offerings simpler. Consumers do not appreciate clutter; they appreciate everything being transparent, clean and easy.
Marketers should understand that consumers rarely inherently care about brands. In some countries, only about five per cent of brands would truly be missed. Whether consumers order an Uber ride, or buy a carton of milk, they often want to invest the least amount of effort and time in making the right decision.
Overloading consumers’ already saturated brains with all kinds of marketing tactics, including dynamic pricing and even heavy discounts can backfire or fall flat. This was clear when consumers showed a lack of interest in even 90 per cent discounted product at Dick Smith’s closing down sale.
Instead, every decision brands make should be guided by a desire to help customers feel confident about their choices. Fortunately, we can learn from a handful of companies that have long understood the principle of simplicity in driving customer satisfaction.
Aldi’s success, for example, is often attributed to its simple business model of providing consistently low and transparent prices for a reduced range of high quality products.
No discounts, no confusing ads, no loyalty cards, no bullshit.