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Study Reveals What's Really Going on in Aisle Six

As the holiday price wars rage on, it's worth taking a step back and thinking about what it really takes to win a consumer's heart. The answer isn't always prices.

As the economy soured, consumers became increasingly resourceful in order to make ends meet. Sure, many people traded down to less expensive brands, including generics, but that doesn't mean everyone was shopping on price alone.

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A new study released by the Grocery Manufacturers Association, Booz & Co. and SheSpeaks backs this up. It provides a close look at the many factors influencing a shopper's decision to buy, and price is just one of them.

The study, which is called Shopper Marketing 3.0: Unleashing the Next Wave of Value, surveyed 3,600 shoppers and tracked, with great detail, their habits as they decided which items to buy, digging into which types of promotions influenced their decisions. Researchers talked extensively with these shoppers, even videotapping them as they moved through the store.

What's surprising is that nearly half of food and beverage shoppers and almost 60 percent of health, beauty and household goods category shoppers said they would purchase their preferred brand even when a less-expensive alternative was available. What's more, these loyal shoppers are increasingly using coupons and price promotions to justify their decisions.

By using coupons and other promotions, shoppers can often narrow or reduce the price gap between the brand-name good and the generic brand, said SheSpeaks CEO Aliza Freud.

Consumers are doing their homework before heading to the store. More than three-quarters of the shoppers took time to do research before heading to the store, typically an hour or more.

Even so, there's still plenty of room for marketers to influence a shoppers' decision. According to the study, the vast majority of shoppers — some 77 percent — enter stores without detailed shopping lists and select nearly 59 percent of the brands they buy when they enter the store. That's where in-store coupons and displays were able to push a consumer to buy something on impulse.

The study found that how a consumer thinks of a product category is important. For example, do they say "peanut butter," or do they say Unilever'sSkippy or J.M. Smucker's Jif? Chances are, if they say the brand, in-store promotions aren't likely to sway their decision.

That said, in categories where consumers are less loyal — think commodities like sugar, table salt, and frozen vegetables — private label brands may have gained some solid ground.

"I definitely think what you are going to see that this is a new normal," Freud said.

Over the past year or so, consumers have learned that the quality of private label products is better than it used to be, and many retailers have successfully given their store brands more appeal by improving their packaging and in-store presentation.

For example, Wal-Mart Stores has relaunched its Great Value store brand with new packaging that stands out on store shelves.

In fact, Freud's research shows consumers increasingly speak of the Great Value brand as well as Costco's Kirkland brand, Target's private label brands and Trader Joe's store brands much the way they would speak about national brands from Procter & Gambleand other major manufacturers.

It's an important dynamic that underscores the increasing tension between retailers and manufacturers that has emerged. It also may suggest that gains in private-labels sales are more sustainable than previously thought.

That's clearly a question on the minds of TreeHouse Foods investors. The company, which makes private label soups, salad dressings and non-dairy creamer, topped earnings estimates late Tuesday, but shares are trading down today.

Barclays Capital analyst Andrew Lazar said investors fear the rate of private label gains are cresting. However, he noted that TreeHouse management said there has been little change in the performance of private label brands compared with a year ago.

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