It is necessary to make the difference between a commodity and a brand. A commodity is a product which has no specific identity or name of its own which would differentiate it from other similar products. Examples are grains, cereals, petrol, minerals, and market vegetables. Commodities sell only on their visible assets, namely price, quality, ready availability and sometimes credit terms. Anyone of these assets may disappear at any moment and the product is liable to lose its appeal.
Commodity trading therefore rests on unstable grounds and it must be backed constantly by aggressive purchase price negotiation and intense selling efforts without any relaxation, and price competitiveness. This is why we say that commodity trading is volatile. It does not mean that this trade has low profitability. True, commodities sell most of the time on price, but are handled in such large volumes that these make up for their low margins. Giants like EXXON MOBIL (petroleum products) and GAZPROM (natural gas) are commodity traders and yet churn out phenomenal profits year in, year out, without necessarily having competitive edges over their competitors.
An identity of its own
A brand is a product or a service which has an identity of its own. This can be a name (Perrier water), a competitive price which gives definite value for money (Toyota), a superior quality (Omega watches), a higher level of performance (Dyson vacuum cleaners), reliability and security (Mercedes Benz).
Strangely enough, buyers do not always buy a product solely on the basis of its solid and proven objective qualities or its price. Some brands sell on an image which can be very ephemeral. Examples of such brands are Orangina (unique round bottle), Toblerone (unique triangular presentation in its packaging), Ferrari (red colour) and Coca Cola (drinking sensation). In such cases, brand value depends on subjectivity, namely perception, which is a latent asset or quality which does not seem to obey to any objective marketing rules. This is the basis on which brand image is built, and the brand sells on the perception that it is vastly superior, like Christian Dior shirts and Lancôme perfumes.
Another driver of sales of exclusive and expensive products (what we usually call designer products) is the urge of their buyers to make a statement: that of conveying to people around them that they have means, or taste or that they do not want ordinary people to penetrate into the intimacy of their inner circles where everybody buys exclusive goods. Some people want to be seen to be superior or different, and this desired visibility in the case of designer shirts, for example, is given by placing the brand logo on the shirt pocket, to be ostensive. If this logo is hidden inside the collar, as for ordinary off-the-shelf shirts, it considerably reduces the appeal of the product.
Smart and successful producers or distributors of image products analyse and diagnose what is behind the mind of their affluent buyers and smartly take advantage of their sense of superiority. They work on promoting their snobbism, by investing heavily to build the image of their products on exclusivity of design, special packaging, colour identity and sponsorship of elite events like horse riding shows (équitation), formula one racing and high level fashion shows.
Positive and negative perception
Perception is a feeling or a state of mind of a very pernicious nature, which obeys no rules, which cuts both ways. It can make a brand a winner (positive perception) or a loser (negative perception). Once a product acquires a negative perception, this tag stays for a long time with no apparent reason, to the extent of often compelling its producer to simply write off the brand and start anew. What follows is hardly believable. The same product, differently presented and packaged, under a different name, can be a winner if marketed with intelligence.
Strong brand loyalty and constancy in quality
Brand loyalty is an important component of the success of all market leader products. Once a consumer or user gives his loyalty to a brand, the brand owner can relax and invest minimally in marketing tools, like advertising, promotion and frequent change of packaging. He only has to do what is enough to keep the product in the mind of its customer as being always available, constant in its level of quality, at an affordable price which gives the buyer no reason to complain. These keep competitors at bay, at relatively low cost.
Perception can make a brand a winner or a loser
While all business gurus will tell you that all processes, equipment, and products must adapt to change, this is not an objective set in concrete for all products. Electronic equipment like computers, mobile phones, and software must be constantly enhanced and upgraded in performance to keep their competitive edge, their market leadership or their respective positions on their markets. Fashion clothing and fancy jewellery companies are constantly racing against time to be able to propose frequent changes in their product design which will make them first movers on their markets and bringers of innovation. This is what makes their customers buy more, even if the intrinsic need for more clothes and jewellery is not there.
The strength of many brands which bank on their customers’ loyalty, quite to the contrary, is their constancy in their offering and this defeats the too often quoted paradigm that adaptation to change is a must in business. The success of Coca Cola, which I consider to be the biggest brand in the world, lies in its constancy. The day it changes the taste of its product, it will face an erosion of its customer base and may have to suffer the embarrassment of reverting to its original taste.
Constancy in quality and strong brand loyalty are not the hallmark of powerful international brands only. In our small and relatively unsophisticated market, there is a brand called Mine Apollo (noodles). It is a monument of a brand which moved from innovation, as a first mover in its sector, to unchallenged market leadership, due to constancy in its quality and its positioning as an inexpensive household product. Today, if we have 3,000 food retailers in this country, it is present in all 3,000 outlets, and I can see only Coca Cola matching this.
To an equivalent degree, consumers have an acquired taste for most of the basic food items that they consume, and this goes from milk to butter, cheese, fruit juice and even the very basic commodity called water. There are two giant producers of bottled water in Mauritius, namely Crystal and Vital. Their respective market shares remain unchanged by whatever advertising they may do, precisely because of acquired taste, which is an important vector of brand loyalty.
Other exceptional types of brands
A product needs not be at the height of technology to be a big brand. Sometimes, brands are built on products which require only basic technology to manufacture. Some products have hardly any competitive advantage which they can sell for money.
Let me quote an example of such a product. It takes the most basic level of technology to manufacture a minted sweet, and there is practically no entry barrier to any producer who wishes to enter that market. Yet TIC-TAC has been made into a massive brand, sold worldwide at a price which is more than three times that of a generic minted sweet. It has created from scratch its own competitive edges, namely a small transparent plastic container which shows the product, with a flip top opening and a display rack which is different, and which displays the box in an oblique view. It is plain minted sweet, with probably a higher content of mint concentrate which makes the product different and more “burning” on the tongue. It has added “value” to a commodity. On top of this, it is sold in a packaging which compels you to buy more sweets than you actually require at the time of purchase.
A brand can also be an organisation, a company, a sports club and even an individual. Roland Garros, as a promoter of a grand slam tennis tournament, is a powerful brand which can command any price for its ticket and television rights. Epsom and Chantilly are powerful brands where only the elite goes and pay hefty entry tickets.
A product needs not be at the height of technology to be a big brand.
Brand loyalty is an important component of the success of all market leader products. Manchester United, Liverpool and Real Madrid are giant brands in football, which have been built on performance, success and constancy. They command high television rights worldwide and expensive entry tickets to their grounds, and yet selling more than 60% of their seats in advance of their league tournament, prior to having played even a single match. The added miracle they have achieved is that their fans’ loyalty remains unmoved even when they slip down the league table due to mediocre performance, and they do not suffer any loss in revenue. Their fan loyalty is built on their tradition and the sense of belonging of their fans to the club, which has been built on regular communication of club news to them.
Many high achievers in sports are icons having considerable brand value. It would be superfluous to mention any of them, but there is a case worth mentioning. Maria Sharapova is an average performer in tennis, but a strong brand which makes her one of the highest earners as a sports woman. Her brand strength is based on constancy in her looks and mannerisms. She is constant in being smartly and decently dressed, sober in her attitude, not showing exuberance even in exhilarating moments and a body language that does not change. You may not like this icy attitude, but a majority of her fans do and she has caught the eyes of her sponsors as being able to hold high their respective brand images. I have no doubt that her image has been thought and planned and not just existed haphazardly. Serena Williams is probably the greatest female tennis player of all times, but she carries no brand value in my thinking and earns less than Sharapova.
Strong brands provide the ability to attract money. Human brands usually die on their demise. Mother Theresa was by no means a star, but a powerful brand that could collect considerable amounts of money for charity when it was needed. This money attracting power has gone with her demise. At the other extreme, the Elvis Presley brand, 40 years after his death, remains a money minting machine because the brand that he was, has been maintained, looked after and advertised.
The secret lies in being different
There is, in this exposé, considerable information as how to create a brand and break into a market, even if it has reached saturation. The secret lies in being different, in finding in a product, acquired or created, its definite competitive edges over the competition and to position the product in a segment that suits it most, be it in a niche market, in the mass market, in a price market or in a premium market.
The competitive edges having been identified, they need to be highlighted and communicated, either by advertising, tasting, exhibiting, free sampling (for products of low unit price) or free tasting (for food items). Communications regarding any brand is not an easy exercise. Producers or sellers must identify the appropriate media, bearing in mind the extent of the exposure it gives, as well as its price. Then they must determine the exact message to be conveyed, and the language that suits best and is most understood by the target market.
I have never read a single book on brand building in my professional life, and none of the ideas developed in this article have been borrowed. Yet, I have managed, throughout my involvement with fast moving consumer goods, to create or import products and nurture them in order to have at all times a product portfolio consisting of either market leaders or close challenges to the extent of 80%, and most of them selling at a premium price. The secret lies in: 1) having enough psychology to read into the minds of consumers what they would really appreciate in a product and what price they would be prepared to pay for it; 2) placing every product in its appropriate market segment and not be greedy in trying to secure the whole market; 3) positioning every product in a manner that attracts customers, be it quality wise, price wise or image wise; 4) communicating the competitive edges of each product to its correct audience in a chosen media and in language that they understand best.
By Mubarak Sooltangos (email@example.com)
Author of Business Inside Out (2018), a book inspired by his 40 years hands-on experience in business in a variety of sectors.
Courtesy: CONJONCTURE, the electronic journal of PluriConseil