branding of commodities
BRANDING OF COMMODITIES:
HIDDEN ISSUES AND PERSPECTIVES
“ A brand is not an icon , a slogan, or a mission statement. It is a promise—a promise your company can keep.....................This is the promise you make and keep in every marketing activity, every action, every corporate decision, every customer interaction”.
-----Kristin Zhivago, “ Business Marketing”
SHIVANI GUPTA
EXECUTIVE SUMMARY
The inimitable nature of the consumer market has necessitated the need for a fundamental and radical change in the strategic aspects of doing business. The biggest challenge facing manufacturers today is how to differentiate their commodity so that their business rises above the commodity market place to enjoy the margins and premium associated with consumer packaged goods markets.
Therefore the key to the success of marketing commodities in today’s market place is an intense focus on creating true economic value for those customers who are willing to pay for it and a brand strategy based on product, delivery or service differentiation.
In this context we have categorized the commodity market as commodities consumed at industrial level (B2B) and commodities consumed at retail level (B2C).
Branding in the context of industrial buying has been determined on the basis of research conducted by McKinsey which states that consumer’s concerns for on-time delivery, consistency of product performance, level of technical support and service, and relationship with supplier are greater determinants than price while placing order.
Therefore companies which serve different segments of industrial buyers can maximize their sales by slotting prospective customers into a needs-based segmentation scheme.
Analysis of branding of commodities consumed at retail level (B2C) shows that manufacturers must effectively differentiate their product offering vis-à-vis competitors as it moves the buying decision away from solely price factors and therefore generates long-term profitability and sustainable advantage in a crowded marketplace.
We have substantiated the above with relevant case studies in commodity markets like Wheat Flour(Atta), Bottled Water, Poultry, Steel and Dairy products.
INTRODUCTION
By definition, commodities are products and services that customers perceive to be exactly the same.
A market becomes a commodity market if the suppliers choose not to differentiate themselves, either through their products/services, or through their brands. Equally, any market can become a branded market if the suppliers choose to differentiate themselves
But companies that sell products such as bulk chemicals, paper, and steel tend to emphasize operations and sales over marketing, striving to unload as much inventory as possible at the prevailing market price. Viewing themselves as commodity producers, they particularly overlook the [next page]