We believe in the power of brands. We have to. In action sports/active outdoor, there are very few “moats” around products. That is, there are few distinguishing product features not based on marketing that are sustainable and even long-established brand names run into difficulties holding onto their market positions. Witness Nike’s current struggles.
Years ago, I asked if maybe brands weren’t going to be as important as they had been. I was wrong- and right.
I was wrong because they are still important. To the owner of a brand, there’s nothing more important because the strength of that brand is typically the only point of differentiation you have or can offer. There’s no design, feature, category, or marketing approach that isn’t quickly duplicated by competitors.
To your customer, I don’t think brands are as important. No- let’s put it this way- your brand isn’t as important. Sure, they may love your brand and follow you and talk about you. Does that translate into buying your product? More importantly, does it translate into buying your product over a long period of time?
Much less than it used to, I’d say. Brands don’t control their message or information flow the way they used too. New brands are very easy to start and find. Or at least easier. I can’t think of a serious barrier to entry. Our customers seem to enjoy the process of discovery, and there’s always a new brand to discover.
Lots of barriers to brand growth though. To me, there are three major ones. They are general economic conditions, the need to be cautious in distribution to support brand strength, and the advantage big guys have in systems (so in customer information) and logistics.
My research department made me aware of brandless.com. It was the source of the title of this article. Generic brands are hardly new. I was first aware of them during the inflation of the 1970s, when various generic household products showed up in supermarkets. They were about acceptable quality at a low price and nothing else. I was a poor college student at a time, so when generic beer showed up, I was okay with that. It sucked, but I didn’t understand that at the time. Anyway, it tasted fine after you’d had five or six.
Brandless is a pretty new site and the product selection isn’t extensive. Their goal seems to be get you to see their products as inexpensive, but high quality. Here’s the list of product characteristics at the top of their home page: Certified, Organic, Gluten Free, Non- GMO, Vegan, No Added Sugar, Certified Kosher.
I’m not sure if I care that my cotton swabs are gluten free, as I rarely eat them, but whatever.
Mostly, we don’t want our products seen as inexpensive and certainly not the dreaded “cheap,” but we don’t mind if they are perceived to be a “good value.” That’s sort of the Holy Grail of product positioning I guess.
The reason brandless.com has a chance is because unless you’re selling exclusively to the top one to five percent by income, everybody want (needs?) a good price. But they also want some cache, quality, and a good feeling about their purchase. Brandless is trying to offer all those things and I think it’s intriguing to try and do it with nonbranded products- except of course Brandless is a brand.
There are some competitive implications here for new/smaller brands. The first one is that you aren’t competing against the big guys. You can’t. Don’t try. You are competing against the other smaller brands in your space. You do that partly by laying low.
A better way to describe “laying low” is to say that you never push your brand into any distribution channel. You require that it be pulled. In brick and mortar, it must always be just a bit hard to find, and a surprise when they find it- especially early in brand development.
Laying low also acknowledges that we’re in the middle of a consolidation of both brands and retailers. Just hang out and let the other guys fight to make it into Macy’s. As you do that, you build your brand as they screw theirs up. Sorry it takes longer than you’d like.
My expectation is that most new brands will start exclusively on line. If that describes you, when you do take your first foray into brick and mortar, work with and visit what I recommend be a very small number of retailers all the time. They must be inventoried correctly, merchandised perfectly, and the sales people must know your story. You get only one chance, which is why I’m a believer in a very small number of initial brick and mortar retailers. All close to you. There’s a lot to learn. That learning will allow you to systematize your expansion.
Talk with each of those retailers about how they will manage your product online and how that will relate to your own web site. Clarity about pricing and discounting please. Your best brick and mortar partners will be the ones who have some patience with growing your brand (some things haven’t changed) but that requires that you also have patience in how you distribute and grow.
Resist putting product into brick and mortar on consignment. Perhaps, if you are asked to do that, your brand isn’t developed to the point where the retailer asking for consignment makes sense. Yes, I do have a bias that you can make your brand credible before it’s available in brick and mortar. That’s a point I’d love some comments on, because I’m not sure I’m right.
Okay, data. The systems the big players are putting in now will eventually be available to you, but it’s going to take a while. You must already realize that your ability to compete depends on almost real time knowledge of who’s buying which of your products where and at what price. It further depends on shortening your supply lines and time to market so you can react quickly to changes in customer preferences. I think I’ll go so far as to say you should do this even if you have a pay a higher product price. If your branding and distribution isn’t solid enough to handle that, you may have way bigger problems.
But as always, it’s a matter of the actual numbers.
Some larger companies are experimenting with new system algorithms and are confident they will get some great new perspective on what’s selling to whom and why. But they aren’t quite sure what, exactly, they will learn.
Like most things in our industry, good data may deteriorate from a competitive advantage to something you just must have to compete. But right now, I see it, even without fancy new systems and software, as a way to compete if you’ll just take the time to collect and analyze it. As an industry, we haven’t always been good at that.
Don’t you love the way I always make this sound so simple? The hardest part may be actually deciding to do it in the midst of running your business.
Do what? Okay, good question. Let’s summarize
- Be patient. The economy requires it. Let your competitors screw up reaching for too much growth.
- Make your supply chain faster and flexible, even if it makes product more expensive.
- Position yourself to be unhappy from not having enough product rather than from having too much.
- Get the best data you can get from the systems you have and strive to improve that data. Given changes in how you sell (maybe I mean in how your customers buy), what new data would be useful? You’ll probably require some changes in your chart of accounts.
- Find the balance between following and leading your customers. You used to do more leading. Now, it’s follow time, but don’t let them take you where your brand should not go.
- Acknowledge the power the consumer has. How must your company operate to offer a competitive price, high quality, surprises, experiences, and new product more often? And still earn a profit.
What do all those six points do? They help you build your brand. Every part of your company must be channeled and connected to doing that. Once you acknowledge, for example, that accounting is a brand building tool, you’ll be making progress.