Friday, October 16, 2015

Branding Commodities

An increasing number of brand managers indicate that their brands operate in commodity categories. I first began focusing on this area when I conducted a branding seminar in Dubai, UAE, and was asked by several conference attendees who worked for different energy companies to help them think through how to differentiate their brands so that they could command a price premium.

When marketing true commodities such as petroleum, palm oil, and soybeans, consider the following ways to differentiate your brand:
  • Deliver superior product or service consistency (quality control).
  • Deliver superior responsiveness (order fulfillment, technical support, customer service).
  • Offer a superior range of products and services.
  • Consider value chain integration.
  • Uniquely bundle or unbundle your products and services.
  • Customize your products and services to meet each customer’s specific needs.
  • Identify your most important or profitable customers. Determine what they value most (through conjoint analysis or a similar technique) and then tailor your products and services to meet their specific needs.
  • Add a differentiating “ingredient” to your brand (ingredient branding).
  • Add unique packaging to your brand.
  • Distribute your brand in a unique or superior way.
  • Establish your “brand as a badge,” adding psychological value to its products and services.
  • Create a superior product purchase or usage experience.
  • When all else fails, make superior creative in marketing communication the hero in brand differentiation.

To drive home the point that any commodity can be differentiated, I assign “branding water” as a case study. As you know, water, the odorless colorless liquid, is the ultimate commodity. Despite its scarcity in certain parts of the world, 70 percent of the earth’s surface is water and the amount of water in the human body ranges from 50 percent to 75 percent. Furthermore, in most developed countries, water is readily available from public sources and in every home.

I have assigned this case study to hundreds of teams over the years, and many of the outcomes have been truly impressive and worthy of new business ventures. People have identified the following differentiating elements:
  • Target customers
  • Suggested/specialized uses
  • Ways to drink
  • Taste/flavoring/carbonation
  • Color
  • Bottle/packaging shape, color, and functionality
  • Size
  • Price
  • Source/story
  • Health qualities
  • Bundling with other products
  • Distribution

If you ever run into a brand manager or consultant who indicates that it is impossible to brand something in the “XYZ” category because it is a commodity category, politely thank that person for his or her advice and then apply one or more of these approaches.

© 2015 by Brad VanAuken, excerpted from Brand Aid, second edition, available here.

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