Consumer brands are designed to create floor traffic for retailers (because the consumer wants the brand) and value over private label products because the branded products are innovative and worth the increased price the consumer pays.
Over the last 15 years two changes have conspired to decrease the relevance of some brands in the consumer market. First, the big boxes have so much floor traffic it is difficult for many brands to have an impact on that floor traffic, and simultaneously, many branded product suppliers have decreased their investment in creating innovative products, which are actually more valuable than their private label counter-parts. And, oh by the way, some of the private label suppliers are getting more innovative.
The result is decreased brand value, and whining by some branded product suppliers that the big boxes are squeezing them so they cannot maintain their brand value. A case in point is non-stick cookware.
The holy grail in non-stick cookware is easy release (highly non-sticky) and long life. Since abrasion is the enemy of the non-stick surface, getting great release and long-wear has been the trade-off the creators of the materials have struggled to overcome. Recently the innovation leader in this technology, Whitford Corporation of Pennsylvania has created a true breakthrough in this product category with their Eterna product line. (I know you think DuPont Teflon is the innovation leader. Actually no. They own a very valuable ingredient brand. Whitford did not follow an ingredient brand strategy, choosing instead to invest in continual innovation. Thus becoming the innovation leader in the category).
You would think that this breakthrough coating would first appear on high-end brands in high end stores such as Williams-Sonoma. Or perhaps in mainstream retailers like Macy’s. Actually no. The first user of this new coating was Tramontina who is supplying Costco. They have been selling a LARGE number of pans which use this breakthrough coating. And as is Costco’s policy, selling them at low prices, thus providing amazing value for their customers.
If you want to know what is causing brand value erosion it’s not price, it’s that the WalMart’s, Costco’s and Home Depots of the world are becoming more willing to be innovative with their private label and private brand suppliers like Tramontina, while the so-called branded product suppliers are becoming more cautious and less innovative.
How are you making sure your innovation is appropriate for your market?
Mitch
