Today on Branding Strategy Insider, another question from the BSI Emailbag. Ahmed, an entrepreneur and brand marketer in San Francisco, California writes:
"I own a modern furniture company and sell numerous brands. At the same time, I want to build my own company brand, called Urban Loft, because (1) the name alone is the ideal name for the lifestyle/product and (2) I’ve successfully trademarked the name and want to take advantage of it. In an ideal world, the products I sell would be exclusive to me and this will be a non-issue. But in today’s internet era manufacturers are acting like retailers — pushing their own brands — good for them, but it conflicts with my interests and building awareness for my brand.
It seems I have two options. First, I can sell products (either on the web or in the retail store) without marketing my manufacturers' brand. Or I can go with the flow (like most retailers online) and market that I sell other brands. This article recommends the second option. What do you recommend?"
Thanks for your question Ahmed. Is your store primarily a brick and mortar store or an online store? If it is a brick and mortar store, there are significant advantages to branding your store. Having a strong retail brand is a primary source of leverage when negotiating with manufacturers’ brands. Plus, the actual retail space allows you to create a specific branded environment and customer experience. Your store will come to stand for something, a certain style or lifestyle or something else. While I wouldn’t mask what manufacturers’ brands you carry in your store, especially if they are brands with allot of equity, I would focus on what your brand stands for and create the right environment, retail display, service level, mix of products, etc. to reinforce that brand. If you are primarily an online furniture retailer, the brands you carry, the website functionality and especially your product pricing, become very important to your success. The way you present products so that people can get a sense of the “look and feel” and the quality is also important.
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The last thing we need is another sermon on Apple’s success. It is the most valuable brand in the world according to WPP’s BrandZ ranking, climbed 21 spots to #35 on the Fortune 500, and has now usurped Microsoft on every conceivable metric of financial performance. But on the 10-year anniversary of the opening of Apple’s first two stores in Tysons Corner, Virginia and Glendale, California, I thought it would be worthwhile to explore the often-overlooked role of Apple’s pioneering retail experience in the brand’s resurgence and sustained momentum.
Legend has it that at the turn of the century, Steve Jobs hired McKinsey & Company – knowing full well they’d tell him retail stores were a terrible idea – just so he could prove them wrong. Whether or not it was intentional, he did. Apple now operates 324 stores in 11 countries, and in the 2010 holiday quarter alone, retail stores brought in 75 million visitors, nearly $4 billion in sales, and a $1 billion retail margin. Apple’s stores consistently account for 15-20% of the company’s total revenue, in effect writing the business case for their own existence.
Yet as marketers we know that more often than not, it is a great brand that lies at the core of a thriving business, and so it is also important to understand Apple’s stores from a brand-building perspective.
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Many marketers asked Santa for a social coupon campaign for 2011. The explosive growth of Groupon and Groupon clones (BuyWithMe, LivingSocial, SocialBuy, and Tippr), offering “ridiculously huge” coupons (50-90% off), is taking marketing plans by storm.
These social coupon sites promise high customer demand in return for a deep discount and a share of the deal. In August, Gap offered a nationwide deal of $50 worth of apparel for $25 through Groupon. Some brands and businesses are offering social coupons directly, including ConAgra, Jack in the Box, and Walmart. However, the biggest participants have been small and mid-size businesses.
But tread carefully before you join the social coupon bandwagon. Running such deeply discounted deals can create a short term volume spike that backfires in the long run. There are plenty of cautionary tales from brands and businesses that didn’t do the math and regretted it.
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You might have felt a slight rumble under your feet last November, and heard the faint but unmistakable sound of an unstoppable object coming into contact with an immovable force.
In the US, the epicentre of the collision, the noise must have been deafening. In a marketing version of Godzilla versus King Kong, bulk retailer Costco and Coca-Cola went to war.
For weeks, the two had been negotiating a new supply contract. Then in November, the talks broke down and Costco, the third-biggest retailer in the US, released a terse statement: 'At this time, Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve.' This means that Costco will no longer stock Coke, Sprite, Fanta, Powerade or Dasani until the matter is resolved.
Although it is impossible to be sure what took place behind closed doors, it is likely that the two parties approached the pricing discussion with conflicting outcomes in mind.
In the US, Coca-Cola is trying to increase prices to offset the gradual decline in volume sales, so it's possible it tried to ask for more money.
For Costco, facing stiff competition from other big discount players such as Sam's Club and Trader Joe's, the emphasis would have been on Coke dropping its prices. With Costco's profit margins already nerve-shreddingly thin at 3%, a price cut is the only way to ensure it can undercut its competitors. The two corporate behemoths were set on a collision course and the wait was on to see who would blink first.
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1) Inconspicuous Consumption
Consumers respond to the social moment by taking consumption into the closet. As when we talk about going to Fred's (in-store restaurant), not Barney's. Or, ask to have new purchases shipped, rather than be seen carrying a branded shopping bag. Or, decide to have shoes repaired and last year's jacket altered. Spending as a covert activity. No bragging rights.
2) The Dyslexic Dilemma
It's a "b." No. It's a "d." Consumers stall in their tracks, trying to figure out what to do, right now. Are we heading out of the woods, or perhaps a bit deeper into it. The moment to watch: What happens when unemployment hits 10 percent at the exact moment the Dow tops 10,000. That deer-in-the-headlights look on the consumers' face: Now or not yet? What is the real barometer of economic health? Dare I buy a peach?
3) Private Labeling
The number one brands thrive, innovating, advertising and product improving. But, the number 2s and 3s stop striving, unable to compete with performance advances or on price. Into the vacuum steps Private Label. No longer just "okay, available and cheap," these grocery aisle invaders are well-branded, feature rich and are oh-so-profitable for the stores. Say goodbye to familiar but moribund household names; say hello to snazzy new entrants that shave quarters off the check-out total without sacrifice. (Store brands in play at Walmart pictured above)
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