To be yourself is all you have to do!

Brand managers increasingly find themselves playing the role of David in the escalating battle against the Goliath retailers of the world.Many fast moving consumer goods companies have resorted to “collusion” or “avoidance” strategies to try to stay alive. These strategies, despite some local success, might backfire and encompass huge risks for premium brand manufacturers. Here is why:

· Producing for retailers further reduces manufacturer’s power vs. retailers and reinforces the risk that already exists of consumers considering products to be identical. It automatically creates some level of acceptance for premium brands to play in niche positioning with small volume and high margin compensated by scale coming from retailers supply. This gives consumers less reasons to stick with the brand and start showing more versatile purchase behaviour.

· Tiering strategies with portfolios that move away from premium only to a spectrum of high to low end offerings makes consumers more confused. They have more difficulties accepting high tier prices for the same brands. As they move to low tier, high tier products become niche and low tier brands lose in differentiation and consumers become less brand loyal.

· Exiting low involvement categories to high involvement categories through external growth and acquisition is simply delaying the issue instead of fixing it. It’s only natural that private label brands will move into high tier brand territory to keep their expansion rate. This is what we see happening with the president’s choice brand in Canada and in the beauty care category in Tesco UK.

These strategies are inefficient and are fairly short term focused. In my opinion, the only viable strategy for the brand manufacturers in the long term is to win the joker of the future battle which is what consumer preference is all about. The consumer is and will be the decisive ally in the future for the success of premium brands. The only way to drive consumer preference is through relevant differentiation or uniqueness.

Distinctiveness is the main driver of the premium brand win in terms of purchase intent. As we move toward higher loyalty to retailer brands, distinctiveness continues to show the highest potential in terms of stopping the erosion of premium brands’ purchase intent. No other brand attribute, physical or not, could show such power. It will be more and more difficult for premium brands to differentiate physically vs. retailer brands. Small physical superiority is unlikely to be decisive for consumers in low involvement categories. The challenge many premium brands are facing today is concerning their capacity to develop a continuous flow of innovations that make them distinctive yet relevant to consumers. Intangible but relevant brand uniqueness seems to be the most realistic way premium brands can create superior value for consumers. In conclusion, playing the retailer’s games can easily backfire and endanger even more premium brand businesses being forced into niche positions. It is only by brands being unique and building on strong brand equity on an ongoing basis that David, can once again, beat Goliath.


Sources/Articles/Notes/Additional Readings

· Retailization: Brand Survival in the Age of Retailer Power ; Lars Thomassen (Author), Keith Lincoln (Author), Anthony Aconis (Author)
· “ Retail Power: Making Or Breaking The Brand ”; Brian Moore, EMR-Namnews
· WARC – “The Brand Squeeze” Keith Lincoln
· “Will private label drive out manufacturer brands?”; Helen Passingham-Hughes, Admap, October 2004, Issue 454, pp.56-57
· “Brands, be yourself!”, Driss Farissi, ESOMAR, Retail Conference, Budapest, April 2005
· “Brands, retailers and consumers. Are we moving towards a new equilibrium?”, Judith Passingham and Stephan Buck, ESOMAR, Marketing Research, Edinburgh, September 1997

• Hard times for retailers: how strong brands can helpPeter Walshe, WARC.com Exclusive, February 2008