BC Business
As the dispute between chip maker Frito-Lay and grocery chain Loblaws shows, brand trust is brand power in the 21st century.
The chips are down for Loblaws shoppers as a spat between the supermarket giant and Frito-Lay translated to not a single chip for consumers.
The dispute between Frito-Lay Canada, one of the country’s largest food manufacturers, and Loblaws erupted last week, with the former claiming that it needs to pass on higher costs to consumers and the latter arguing that it’s trying to protect us from inflation.
Even before the pandemic, a handful of grocery chains controlled most food sales in Canada, and suppliers faced tough demands for discounts and favourable terms. Factor in the effects of recent supply chain issues, coupled with inflation, and the consumer is the one left without any chips on the table.
From a brand perspective, this poses an interesting dilemma for consumers: would potato chip cravers reach for the President’s Choice store-brand chips, or is the brand power of Lay’s strong enough to pull them into a different store altogether?
Research shows that brands have “personalities.” We make friends with them, we fall in and out of love with them, and depending on what the brand is, we learn to trust them.
At the Gustavson School of Business, we conduct an annual survey that measures specifically what it is that Canadians trust about certain brands and what brands can do to earn trust.
While consumers trust store brands like President’s Choice, they’re willing to pay more for name brands like those owned by Frito-Lay, such as Lays, Doritos, Cheetos or Fritos.
And why is that? Both brands have the same ability—essentially, they produce snack foods that are good quality and perceived to be good value, and they deliver on promises made to the consumer.
The difference lies in brand affinity—that is, individual consumers’ relationship with the brand and how that brand has cultivated its relationship with them. In our years of surveying Canadians, we find affinity to be a driving trust factor for products and services.
READ MORE: Canada’s big brands have taken a beating during COVID: survey
Frito-Lay has spent decades building a relationship with its customers. From catchy taglines to funny Christmastime TV ads, the brand has aligned itself with consumers’ lives. Overall, retailers like Loblaws are trusted by consumers, but on a category-by-category basis, name brands tend to command greater loyalty.
What does this mean for brands looking to build credibility with retailers? First, build trust with your consumers. Not every brand has the advertising dollars of Frito-Lay, but in the 21st century, social media adds another dimension of storytelling for even the smallest budget.
But nowadays, it isn’t enough just to have tasty products. In measuring brand trust across almost 400 brands for almost a decade, we’ve found that brands can do well by doing good: trust is intimately linked to values, and to the actions brands take to play a positive role in society. Younger generations (millennials or younger), in particular, pay close attention to the values a brand espouses: its brand authenticity.
For example, this year we saw that those aged 18 to 35 recognized Patagonia as their most trusted brand, rewarding the clothing maker for its support of climate activism. Last year, millennials ranked Lush Cosmetics as the most trustworthy, giving the company their loyalty for its history of donating to progressive groups and supporting grassroots campaigns.
Ultimately, Loblaws and Frito-Lay are competing for consumer trust. Trust drives brand loyalty, and trust will determine which way the chips fall.
David Dunne is a professor of design, strategy and marketing at the Peter B. Gustavson School of Business at UVic.