Commodity versus Premium Brands
This is our third and final installment of The Art and Science of Reaching Consumers, a more comprehensive examination at the themes we touched on in our appearance this fall on Worldwide Business with Kathy Ireland®. In our second article, we discussed an updated path-to-purchase model and how the explosion of communication channels provides a rich opportunity for brands to engage. Our last installment will focus on the difference between commodity brands and premium brands and provide further insights into the type of customer interactions that are setting up brands for success, now and into the future.
The Brand Food Chain
A food chain is a linear model that shows growth and strength as you chart movement up toward the top. One can compare entities at the bottom of the food chain – like producer organisms such as flowering plants – and follow a progression all the way to the top – where the apex predator is located. The characteristics of each type of organism along the food chain display strengths, weaknesses and symbiosis, or how the organism relates to others along the pathway. Believe it or not, this little Biology 101 lesson actually has takeaways for brand and marketing communicators.
In our Brand Food Chain, we also start at the bottom, where the commodity brand resides. Commodity brands by their very nature are ones that don’t necessarily have a particular value proposition or feature that sets them apart from other brands. Common examples of commodity brands are coffee and water. While ultimately you want your brand to move up toward premium status, it’s important to pause here to talk about some fundamentals for all brands, no matter how advanced.
One thing all brands have in common, regardless of their position on the brand food chain, is the importance of developing a good product. Without this fundamental step, any brand will stay at the bottom of the food chain, competing over an ever-smaller piece of the consumer pie. Commodity brands by their very nature are sparring against other brands on features alone, which is all the more reason to have a good product. But there is another reason for quality products that will actually help brands move up the food chain – trust.
Consumers need to trust that products actually do what they’re supposed to do. Laundry detergent has to get your clothes clean; paper towels have to soak up messes without falling apart; and batteries have to power our electronics without draining too quickly. In our article on brand trust, we discussed steps toward developing a trusting relationship with consumers, and the first step toward developing a relationship with consumers is based on direct experience with product. That means delivering on product promise with a useful, reliable and valuable experience.
Moving Up the Chain
Just because something is traditionally considered a commodity product, however, doesn’t mean that it has to stay at the commodity level in the brand food chain. Moving people past the features alone of a product allows for that kind of growth. Let’s take the examples we gave earlier as a common commodity and discuss how certain brands have moved those products up the food chain.
Water and coffee: there are no better examples of commodity products, but some brands have made something seen as a common commodity into something more. Let’s first take Starbucks as an example. Starbucks has created a successful brand on things like their sustainable approach, barista-centered environment and a branded third place, so much so that the brand is almost more known for their culture and experience than their lattes and scones. Holiday cups aside, this coffee brand is renowned for its ability to tap into something larger.
What could be more of a commodity than water? Water is the ubiquitous spring of life; we all drink it and use it to wash our clothes and our bodies every single day. We literally can’t live without it. That any company can take something so commonplace and elevate it to mean more may seem like magic, but Evian has done just that. The brand has made water into a health and lifestyle brand that is both attainable and aspirational, and with the launch of their own water institute, also works to ensure “clean water to drink, today and tomorrow.”
Branding Focused Around People
What do these two seemingly commodity-based brands have in common? Of course, both brands have taken the fundamental step in the brand food chain by developing really good products that are focused on positive consumer interactions, but these brands have done more. Both Evian and Starbucks have shifted the focus of their branding toward the people using the consumer product, instead of focusing squarely on the product itself.
At the benefit level, brands concentrate on how people use and engage with a product or service. At this rung on the brand food chain, brands begin to distinguish themselves by understanding the needs and wants of the people using their product or service. Focusing on benefits allows brands to rise above competing on features like price and product attributes, thereby increasing brand recognition and awareness among consumers.
By putting the consumer, rather than the product, at the center of communication, brands at the feature level effectively reduce competition by making their brand stand out from the pack. Focusing on benefits allows brands to more clearly conceptualize how consumers use their product or service and make their brand more meaningful and valuable in consumers’ minds. A brand at this level is most decidedly not “all the same” in their consumer category. While brands may have distinguished themselves among their competitors and rate high in terms of consumer recognition, they have yet to achieve the golden ticket.
The Big Idea
At the highest level of the brand food chain is the premium brand. These are brands that have done all of the foundational work of developing a quality product and focusing on making the brand meaningful and valuable to the consumer, but the premium brands takes the process one step further. The final rung on the brand food chain is the fulfillment of brand promise.
Earlier in this article, we discussed Starbucks taking a commodity product – coffee – and making it mean more. This brand provides much to study in terms of elevation up the food chain. What Starbucks does has actually been studied by business analysts and branding experts and found to exemplify what the best brands can do and be. The common, unifying element among the best brands across the globe: a big idea. Starbucks big idea? That you can sell an excellent product, produced sustainably in an environment that embraces individuality and inclusiveness, and people will pay more for it and be so loyal that they interact with the brand every day because of what the brand means.
The big idea is the nexus of a great product created by a brand that embraces the end-user experience and fosters an environment that allows the consumer to become part of the dialogue around defining what the brand means to them. This is the real-live experience of a brand across multiple touchpoints; it’s an engagement, a two-way living conversation between brands who listen and consumers who care. The end result? Brand love.
Fusing together all of the ideas surrounding brands moving up the food chain and determining where your brand is on the ladder presents some pointed challenges for brands. Brands that are happy with competing against other brands for a certain market share may be satisfied at the commodity level. Brands that take time to really understand what their consumer wants but maintain communication as primarily one way – brand –> consumer – may be happy to stay at the feature or attribute level.
It’s the brands that know they have the potential to mean more both to themselves and to their consumer that will ultimately define and embrace a big idea. The big idea is where a brand’s product, mission, culture, and communication intersect, fueling a brand with power and passion. So what’s your big idea? What do you stand for?