Sunday, March 21, 2010

Suppliers should build their brand portfolio from the retailers point of wiew

What will the role of the particular brand/product be in the assortment? What effect will be the consequence when adding it to the offer from a total branding perspective? Ingvar Kamprad demanded that the hot dogs in the snack bar at the end of an IKEA store should be priced at levels of 50% lower than expected in order to project a breathtaking offer, contributing to the low price image of the company. The economy staff screamed at the unresponsible action, meaning that this would take away any possibility of making the snack bar operation profitable. Needless to say, Kamprad won the discussion and the profits went sky high as volumes went the same way. This led to the definition of a "hot dog product" at IKEA. A product that the customer has a clear idea of what it should cost, and then priced at 50% of the expected price. Today, there should be a hot dog in each category to enforce the price position of IKEA. This is a great example of hoe product/price mix is translated into a branding tool.

Beeing a brand owner, it sometimes is hard to keep ones head cold when it comes to kill low performing brands, as well as seeing the potential of limited distribution for the real premium ones. An effective way is to categorize the brands and SKU according to brand strength, sales potential and the role in marketing, from a perspective where the brand fits in the retailers assortment. Borrowing the idea of Kamprads sausage, one could easily create other tactical tools by defining the role of the product brand, and then take appropriate actions.

- Category Icon

Description: This brand is a staple of the local/international market. Its history and reputation makes it a definition of the category itself. The category icon is a top level both in terms of brand strength and high volume and could sustain rough handling of its brand, since it defines the market.

Role: The category icons are the main weapon for any company with aspirations in being market lead-ing.

Actions: Defend/develop at all costs. Should be treated with care, but could due to its cult status be used with some force, also in terms of price aggres-siveness. This is possible as the market uses the brands as a definition of the category itself and would not disregard it at any time.

- Category Driver

Description: The category driver is a healthy and innovative newcomer, which brings vitality and new interest into the category, usually from a premium or top premium position. It attracts attention to the category from new target audiences and makes them stronger with the fans of today.

Without the category drivers a category could degenerate as a whole.

Role: The category icon is a tool that identifies the companies that is developing icons of tomorrow and drives the market in a forward direction.

Actions: Use with selected channels to build a premium image.

-Portfolio backbone

Description: B and C type of brands which brings width & depth to a portfolio.

Role: Creates volume as a whole and also show that their owner aspires to be a complete suppliers and a market leader.

Actions: Activate whenever possible in retailer campaigns. For certain brands it could be considered that it should be converted into a PL.

-After burners

Description: B or C brands that suffers from decreasing profit/volumes and are considered having a hard time to recover, despite moderate/high knowledge in the market.

Role: To add to total volumes as long as listed in the portfolio by harvesting any brand value in the public.

Example: Various sub brands in all categories.

Actions: Activate in discount segments if possible, without any considerations taken to future branding issues or traditions. The only consideration whatsoever is volume today.o