Brand Success: Ideas Or Access?

Mark Di SommaNovember 10, 20143 min

As scale focused brands continue to push their footprints further afield in the search for growth, big distributors, both online and off, offer strong and proven channels through which to reach consumers.

Such channels are very attractive – they are major brands in their own right, they bring kudos and market credibility, and of course they have huge client and follower communities. But the share of the asking price that those distributors demand in exchange for that increased market penetration can put them at odds with those who create/ manufacture/ produce.

At stake: who gets to decide price, margin and even quality? The creators – who believe that the idea does not exist without them? Or the distributors – who are of the view that the idea won’t sell without them? The dilemma – who is most effective in realizing the value of the brand? The answer, according to Christine Arden, is whoever touches the customer last.

Increasingly, the price of greater access is the commoditizing of the value of the idea – or at the very least, pressure to make the idea more and more available by making it cheaper. That’s clearly the case with Amazon and the big publishers. It’s also why Taylor Swift said she divorced Spotify this week.

Chris Anderson once said that technology marches towards free. I wonder whether access does the same. As distributors and large retailers gather more data about consumers, gain greater and greater footprints and as the channels they control become ubiquitous, there seems to be increasing pressure to promote volume in order to keep the cash flowing. If you’re a brand in this network, that brings with it huge pressure to continue to drop the take-home amounts in order for the distributor’s take-up model to work.

This Consumers International article highlights some of the potential effects of distributor hegemony. With their combination of buyer power (influence over suppliers) and retailer power (influence over consumers), big distributors lock in a powerful profit circle. At the same time, many have also developed their own brands, putting further pressure on which other brands they stock and in what quantities.

It raises an interesting question doesn’t it for those looking at whether to scale or contain. “How popular can our brand afford to be?” How do you find the sweet spot between being a brand that consumers know and value and becoming a brand that is too well placed for its own good?

There can come a point when all the external markers may be pointing to success and the EBIT is scaling dizzying heights but the margins have become so thin that innovation is next to impossible to fund and the pressure to keep delivering on the present demands undermines your very future. You can have presence and awareness and talk-ability and social proof (all the things that brands crave today) and still be in a downward spiral, hoping for critical mass to kick in and somehow pull you out of the dive, and knowing that if you don’t make it, there are plenty of other brands baying for the opportunity to take your place.

It adds a new dimension to brand placement. Could the margin you retain by being less available and having more control compensate for the volume you achieve by partnering with another party with global reach?

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