The New Australia’s Health Star Rating System: Implications on Positioning, Product Life Cycles and Brand

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On 1st July 2016 Australian food market will see new country of origin  labeling
laws come into force:
http://www.foodanddrinkbusiness.com.au/packaging/country-of-origin-labelling-gets-green-light
              and http://healthstarrating.gov.au/internet/healthstarrating/publishing.nsf/content/home.  Under this new health star rating (HSR) system, all priority food producers in Australia will have to comply with a new quick, easy-to-understand, less ambiguous country of origin labels (CoOL). With just a two-year transition period to fully comply, businesses will have to brace up to re-position their marketing strategies in order to embrace the effects of this new food labeling laws on their product positioning, product life cycles and branding. With this law all products with similar labeling will be able to offer similar functional values; the differentiator being only brand-a name, symbol, mark or design that offers value beyond the functional values (Winer & Dhar 2011). No doubt this will boost the sales of great Aussie goods in the domestic and global marketplaces but what will its implications be on Aussie goods’ positioning, product life cycle (PLC) and brands?image 1

Brand positioning is an activity that not only takes the value proposition and puts it to work in the marketplace by inscribing the competitive edge in the minds of customers. But according to Venugopal 2010, brand positioning goes beyond identity and value proposition to represent the specific needs and attributes that consumers perceive in a brand. With brands being customer-centric, all companies need to understand how their customers perceive the new CoOL on their products. If consumers’ perceptions (actual positioning) significantly differ from the message a company’s labels are trying to convey then its marketing activity will fail.

All producers of priority foods will try hard to meet customers’ needs, attributes and perceptions in this new labeling system. Although some reservations still exist as to the practicality of this new arrangement (See http://www.australiandairyfarmers.com.au/media-corner/country-of-origin-food-labelling-is-it-really-cool), it seems that with the new CoOL, all similar products will have just as equal identity since it would be clearer to the customers what they are buying and why.  According to the Industry Minister Christopher Pyne, the new CoOL is a “big win for consumers” and that “the new food labeling system will provide Australian consumers with the clarity they deserve, without imposing an overly onerous burden on businesses.” http://www.macrobusiness.com.au/2016/03/australia-to-get-new-country-of-origin-labelling/. This might mean that all similar priority foods irrespective of their product life cycles will start from generic positioning, whereby all product labels would be competing with other product categories. So for each company to make its product attractive to their target group, their food should be able to show that it is satisfying a functional or consumer need better than those of competitors in the market through the genuineness of its labels. That means that a company must have the ability to truly differentiate its product from other category products.

With the new labeling laws, it will be left for consumers to categorise brands based on perceived benefits (quality) and the perceived sacrifice (price) into premium, value-for-money and cheap brands. To position any product in the market therefore, the producer has to develop means to communicate either the product’s actual or perceived differential advantage and be able to know what position its brand occupies in the competitive marketplace. For some similar positioned brands, customers’ emotions (emotional positioning) will then be the final arbiter. This is the stage where most Apple users are with Apple products-they have developed emotional connection to Apple products.

The new CoOL might just put all similar priority food products back to the risky introductory phase where customers will have either reluctance or excitement to buy any product depending on the true labeling contents and on their meeting the new labeling requirements. Customers must be convinced that the benefits from the new labelled products provide an improvement over the old labelled product. Gone will be the days of false labeling with hidden caloric or sugar contents. Companies can choose to adhere to the labeling requirements and gain customers’ confidence or risk losing market share. For those companies that endear themselves to the hearts of consumers, they will enter the market with skimming prices to create a narrow market. But for new entrants and late compliers they will enter with penetration prices to build a larger market share to deter competitors. However, during the growth phase the number of competitors will grow and the maturity phase will set in with few new customers. By this time most customers would have made their decisions based on the new CoOL. Some companies’ products category sales will then start declining depending on their lack or otherwise of good positioning strategy.

For new products and those products that do not have satisfactory brand positioning, they will have to jolt up to re-position their brands by modifying their value propositions. The new CoOL will give customers better perceptions of products in order to rate products and their competitor brands on a number of dimensions, with the top two most important ones being high nutritional content and evidence-based health claims. Businesses can then use these ratings to plot perpetual maps of how their products are positioned in the market. Other dimensions customers will use to rate products include nutritional information panel that shows the amount of saturated fat, salt (sodium), added sugars and fibre contents, information for people with food allergies, food additive listings and food storage instructions.

This health star rating (HSR) system will provide at-a-glance overall rating of the healthiness of the food products as well as specific nutrient and energy information. The HSR will enable customers to easily compare among similar food products in order to choose the right (or best) product to suit individual circumstances. Producers can then develop their ideal points in a joint space through a perpetual mapping using either attribute-based or multidimensional scaling methods based on customers’ judgement of brand superiority.  Perpetual mapping is a tool that companies can use to give them additional insight into the current position of their products versus their competitors. A company’s marketing strategy is said to be successful if the intended positioning is similar to the actual positioning.

References

  1. Venugopal, P. (2010). Marketing Management: A decision-making approach. SAGE publications. Accessed via DeakinCloud Library.
  2. Winer, R. & Dhar, R. (2011). Marketing Management, 4th Prentice Hall, Pearson.
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