Generic brands are evolving in the competitive landscape, and they are no longer bearing the label of poor quality. In fact, generic brands today increasingly match the quality and consistency of name-brand products. Product lines like Amazon “Basics,” Whole Foods “365,” Target “Market Pantry,” and others are becoming increasingly standard, or even preferred, among other household commodities.

Here’s why this matters for businesses.

When it comes to household staples such as ketchup, flour, toilet paper, etc., the generic and brand versions of the products all essentially have the same ingredients, and they all do the same job.

And, in a time where consumers are becoming ever smarter and more conscious of the products and brands they consume, they realize this. They also realize there is no reason to pay premium prices just for a brand name and fancy packaging.

So, what does this mean for producers?

This means that being different is no longer enough. As much as brands are willing to spend every last penny advertising their products’ “unique” and “distinguishable” characteristics apart from competitors, these attempts aren’t really received by consumers. Consumers of the 21st century are busy, overloaded with information and don’t have time to sort through an array of options and distinguish the value of differences between products.

Customers want a simple, immediate solution, and they will actively resist differentiation to achieve this. So, customers oversimplify and chunk products into categories.

For example, when put in front of four different brands of toilet paper, generic and brand name, consumers rarely consider all the differences before making a decision. Instead, a common thought process for consumers would be to oversimplify the shopping process and chunk products in a fashion like: “It looks like toilet paper, works like toilet paper, it’s just toilet paper.”

The point is, differences alone are no longer enough.

The key to brand growth today is premiumization.

Premiumization is a term almost like brand equity. Where brand equity can be thought of as the commercial value that is derived from customer perception, premiumization is sort of the method from where that value was achieved.

Underlying premiumization is the understanding of how and why consumers assign value to certain products. And, these thought processes are the reason why customers will pay higher prices for a brand or product.

Based on extensive reviews of behavioral science literature, 6 key pathways were identified as factors that can influence consumers’ decisions to purchase premium prices.  These paths include reasoning such as a product being “safer,” such as Coke or McDonalds who are psychologically deemed safer because they are trusted, safe, and popular brands. Other paths indicated influencing factors such as “social image,” like Nike and Jordan that are seen as symbols of status and aesthetics, and others such as “more innovative,” “a better experience,” “easier,” and “more exclusive.”

Whatever the thought process may be, it is clear that behavioral science is becoming an important component for attracting consumers and businesses will have to be aware of these internal processes for prosperity and growth.