Friday, December 19, 2014

Branding Commodity Products

Producers of raw materials and commodity products often overlook the opportunity to increase their gross margins, create consumer demand for their specific items(s), and build valuable Brand Equity by employing the branding practices made successful by consumer packaged goods enterprises.

The well-know low-calorie sweetener Nutrasweet, and later Equal, made commodity marketing history when they turned aspartame into a household name through the pursuit of a branding strategy previously reserved only for consumer packaged goods and retail products.

Similarly Intel, with their “Intel Inside” strategy, branded their microprocessor through computer manufacturers directly to the end-user, turning their microprocessors into a significant selling point for every computer maker who purchased their products. While greatly increasing the value of their microprocessors, Intel’s branding strategy built brand equity valued in 2000 at $34.67 billion on sales of $33.7 billion.

As well, the pharmaceutical industry has begun branding pharmaceuticals directly to the consumer, empowering consumer choice and demand through informative consumer advertising campaigns which have transformed a previously direct-to-doctor marketplace into one increasingly driven by consumer demand.

All too often the makers of commodity products assume that branding and marketing their products is an impossibility, and could only be accomplished with the finished products of consumer packaged goods manufacturers. Or, they assume that branding is either too complex or too expensive to be within their reach. But these assumptions are not true. For example, commodities ingredients can be successfully positioned and branded, and carried forward as “hero ingredients” within retail products by the commodity manufacturer. Such “branded raw materials,” while increasing the margins of the producers, also bring greater value to both the manufacturer and the end-user. How is this the case? By employing branded raw materials the manufacturer increases the value perception of their product by offering a hero ingredient of known quality. As well the consumer experiences greater satisfaction in purchasing such a product, because of the implied guarantee of a branded hero ingredient.

Branded goods, manufactured with branded ingredients, instill trust, facilitate shopping and purchase, build brand loyalty, steal share from big players, prevent the encroachment of new entrants, and achieve marketplace success. Branding provides an innovative strategy, often overlooked, to overcome the decreasing margins existent in the sale of commodity products, while also creating the sustainable competitive advantage necessary for long-term marketplace success. When coupled with an intelligent Brand Strategy and a Marketing Plan that guides ongoing marketing activities and expenditures, a business rises above the commodity marketplace to enjoy the margins and advantages typically associated with consumer packaged goods markets.

It is through this kind of strategic thinking, that a commodity player gains competitive strength and success against less enlightened raw material players.

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