Question

Topic: Branding

What To Do With Low Profit Goods With Less Info?

Posted by Anonymous on 12/28/2004 at 3:37 PM ET 250 Points
For example, packaging tapes. The product's quality is hard to proof and can't be inspected from the apperance. Tough product? Moreover, the margin is very low which affects marketing budget. Not finish yet, there is less market information provided unlike consumer products that we can find info from many sources directly and indirectly. Brand loyalty is not strong except the super brand "3M".
Well, I've been studying and on seminars but no one has talked about doing a marketing or building brands for tough products in small companies. All I've been taught were about consumer products such as softdrink, shampoo, snack, instant noodle etc. manufacturered from big companies, especially international ones. While I've been working with many small companies with limited budget and information. Some companies can survive working on niche markets where my consultation works, but some can't as they've to depend on huge sales volume. Those companies get only 5-7% NP and vulnerable to economic change. I felt like an idiot couldn't help them much.
Anyone has an idea on how to deal with this kind of tough job? If it's a piece of cake for you, please share and enlighten this stupid me.
FYI, my specialist is on IT products and foods. So, for non-food and non-consumer products I still can't cross the barrier.
Thanks and Happy New Year 2005!
To continue reading this question and the solution, sign up ... it's free!
SUBSCRIBE
Or, SIGN IN

RESPONSES

  • Posted by Peter (henna gaijin) on 12/28/2004 at 4:59 PM Accepted
    The products (like packaging tapes) you are talking about are commodities or near commodities. These often compete on price or based on distribution.

    If a consumer has to choose packaging tape, they will choose the one that meets their price. This is precisely because there is not a lot of information out about the product to give them another reason to choose. With commodities, there really isn't a lot of difference between products, so no reason to put out information.

    Distribution is the other one. Basically, the packaging tape company needs to have their product on the shelf that the consumer is looking at when they want to buy tape. If there product is not there, but a competitor's is, then the consumer will buy the competitor's. So much effort is spent getting in to the appropriate channels to ensure that your product is on as many shelves as possible. This is why companies will make the special efforts that a company like Walmart requires, or they will pay slotting fees or otherwise pay the retailer to show their product.
  • Posted by Peter (henna gaijin) on 12/28/2004 at 8:34 PM Member
    The comment about being on a shelf was more saying that when someone needs to buy tape, they are going to buy the tape that they can find on the shelf at the store they go to. If there is only one brand, that is the one they will buy. Buying tape is a low involvement purchase, so it is not something which would generally have them go to multiple stores and compare prices or products.

    It is only if there are more than one type or brand on the shelf that they will then have to choose.

    I am not convinced that most users would form a brand impression of packing tape. Most users that I can think of buy packing tape very rarely. In my case, I only think about it the few times a year I am shipping boxes to places. As such, I have the same rolls of tape for years, and only think about it when I need to replace them. When I do replace them, I buy whatever is cheapest in the store I am at next. I don't worry about what the specifications are, so long as it is called packing tape. I trust that it will meet my needs. Only if I find it doesn't and I have to replace it would I form an impression (a negative one, and I would then avoid that product).

    More professional users (shipping departments, etc.) may be more picky and have more specifications. In that case, they may ask suppliers for spec sheets. But I suspect this is only the case where they do use it a lot and do have specific concerns about the properties of the tape. I would think in most cases, even these 'professional' applications are still happy with any old packing tape.

    As such, I don't think them seeing it in a store where they are buying personal items at (not for their work)would impact their decision to buy. I think it still comes down to price and availability (in this case, being in the catalog or at the store where they get their supplies from).
  • Posted on 12/29/2004 at 7:26 PM Accepted
    I agree that "commodity" is a state of mind, not an intrinsic quality of some products. Yet the cost of establishing a brand franchise is generally higher with products that are not differentiated. Unless you have an end-user benefit that is really important, it may cost you more to brand your product than it's worth. It could simply be too late in your category.

    That said, you might want to see if you can find a niche market for whom your unique properties provide a benefit that would take you out of the "commodity" positioning. That's the way I'd approach this problem.

    I've branded healthcare facilities, tires, industrial chemicals, fibers, and a whole bunch of other "commodities," and it can be a very profitable strategy, but that doesn't make it easy or cheap. And for a small company it's an even greater challenge.

    You're not going to solve the problem by throwing money at it. And the answer isn't going to come easily. But if you talk to enough users (of your product) and ask enough of the right questions, you may be able to find a unique positioning benefit that you are in a position to deliver. That can be the basis for a branding program.

    It won't be a quick hit, but it may be worth the effort.

    Good luck. Let us know how it goes.
  • Posted by ReadCopy on 1/3/2005 at 3:45 PM Accepted
    I'd argue that Branding is more important in a commodity market. Most commidities are driven by lowest price, and no-one wants to go there because there will only ever be one winner ... in your example 3M.

    So use subtle branding techniques, of which packaging is possibly one of your strongest and easiest.

    Call me fickle, but put three packs of tapes together on a shelf:
    1) 3M with usual branding and premium price
    2) Unknown brand, confusing packaging (attempting to win consumer on quality arguement)
    3) Brand packaged in Gold Fold, simple branding

    I would pick number three, I'm no expert on the product, but seduced by the prospect of quality beneath the high quality packaging!

    Hope this helps a little!
BACK TO TOP

Post a Comment

Related Discussions

Community Info

Top 25 Experts
(Branding)