Keeping Your Brand Relevant In Today’s Commodity-Driven Marketplace- Guest Blog Post By Rick Steinbrenner

Alot has been written about the decline of “legacy” national brands and the rise of “new age” and/or store brands.  The combination of both retailer and manufacturer consolidation combined with shareholder pressure to have successive quarterly earnings growth has done a lot to commoditize the consumer product businesses both in consumer package goods and consumer durables.  In addition, some national brands simply stopped innovating and relied on their current brands thinking they would never decline.  A simple list can illustrate what I mean:

 

“Legacy” National Brands

New Age and/or Store Brands

Duncan Hines baking mixes Apple’s iphone, ipad etc.
Spray N’ Wash soil/stain remover President’s Choice
Crisco shortening/oils Sam’s Choice
Heinz Behr & Valspar paints & coatings
Black & Decker Ryobi Power Tools
Hostess desserts/Wonder dread Swiffer
Sunbeam Dyson
Kodak Canon
Stanley Kobalt/Rigid
Chrysler Lexus
Whirlpool/Maytag LG
Philips/Magnavox Samsung

 

One of the distinguishing characteristics of national brands vs. new age/store brands is they tend to be owned by Fortune 500 companies and/or private equity groups.  These companies tend to be mature, large in scale and in product categories that are either declining in volume and/or highly competitive.  Whereas the new age and/or store brands tend to be owned either by smaller and/or new companies that didn’t exist 50 years ago and have either redefined a product category’s value proposition either by lower price or new feature/benefit innovations resulting in a higher price.

Store brands compete mainly on price; but they are not the cheap “private label” alternatives they used to be and quality can and usually matches/exceeds national brands.  They now account for ¼ of ALL volume in grocery/drug and big box retailers.  Moreover, 80% of consumers now believe store brands quality is equal to/exceed national brands.  This trend continues to threaten the “legacy” national brands in terms of their long term viability.

While national brands tend to look in their rear view mirror and store brands are trying to mimic what national brands have already done; “New Age” brands are thinking outside the box.  They continue to look for consumer “need gaps” and are willing to invest in the future to build a completely new brand.  While this sounds costly and risky what makes them different 1) is a laser-like focus on new feature/benefit product innovations; 2) they create new brands virally via the new digital marketing medium of either direct response and/or e-commerce.  Since digital marketing tends to be more cost effective than the traditional media programs of TV/print their payback is less.  Moreover, consumers are now using the internet to gather information on solutions to problems or perceived problems.  This develops an opportunity for a whole new consumer “experience” which builds new age brand equity in a completely new way by focusing less on mass marketing and segmentation and more on developing one-on-one relationships with consumers/customers.  Finally, new age brands aren’t afraid of cannibalizing their own business to launch an even better, innovative product (i.e. continuous iphone innovations).  They truly seem to have a continuous flow of new products and thus their business franchise continues to grow.

The lesson here?  Don’t be afraid to think outside the box to build up your brand.  Your brand is like any physical asset you have like plants and machinery.  Always focus on new product/feature innovations and you will always have a continuous flow of new products.  In this way, your brand won’t degrade over time and the need for store brands can be minimized.

 

Rick Steinbrenner is a Global Consumer Brand & Product Marketer serving both B2C and B2B consumer product organizations. He can be reached at:  www.globalbrandguy.com

 

 

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