BRANDOOGLE

Category: Brand Positioning

  • What Bank Robbers can teach us about Grey Markets and On-Line Pricing

     

    The bank robber’s motivation is to make a lot of money fast, without putting forth a lot of effort. The same is true of the grey markets made up of on-line Minimum Advertised Pricing (MAP) violators. In both situations, the perpetrators know what they are doing is wrong, and therefore disguise themselves to avoid getting caught.

    Minimum Advertised Pricing policies have been around for decades. While often mischaracterized as being a thinly veiled version of price-fixing, the underlying purpose of these MAP policies is to ensure that retailers don’t engage in a “race to the bottom” on price, and inadvertently destroy the perceived value of the brand. In fact, in addition to MAP policies, many brands have very strict distribution guidelines to continue to reinforce the exclusivity of the brand. By way of example, while Walmart may be the nation’s largest retailer, they carry no luxury brands.

    For brands, MAP violations are moving from a nuisance issue to a major threat to their longer term survival.  A number of large retailers are growing ever more frustrated, and vocal, about the competition they are facing from on-line MAP violators. So much so, that some brands have found themselves “in the penalty box” while they sort out their online pricing and distribution.  Those brands that can’t seem to get this sorted out, risk being completely thrown of some of their largest retail accounts.

    In the pre-Internet era, policing MAP policies used to be a simple as thumbing through the weekly circular to see if anything looked out of compliance. Alas, we are no longer in those bygone days, and MAP policing has become increasingly more difficult. As necessity is the mother of invention, a whole new category of internet price monitoring services has appeared over the last 3 years. Brands are now discovering that their product is advertised on the web at prices well below MAP, on sites they would never choose to be associated with.

    To continue the metaphor, banks have installed the latest camera technology for a two-fold purpose: discouraging would be bank robbers, and secondarily catching bank robbers on film. The same can be said of the many brands that have started using “Internet Price Monitoring” services to capture the web addresses of MAP violators.  In both situations, the perpetrators disguise themselves to avoid getting caught, and the bank film/internet address, in isolation, adds little value in solving the problem.

    It is only when the bank image is coupled with solid detective work, based on clues found at the scene of the crime, that it is possible to identify the person behind the mask. Once the true identity of the bank robber is known, it simply becomes a case of going out and arresting them.

    Unfortunately the same parallel holds true for Brands that get a download of offending websites from the internet price monitoring service (the equivalent of a photograph of a bank robber). Only when brands deploy additional research and investigative resources to identify the true identity MAP violators can they   move from monitoring MAP violations to addressing the supply chain that supports these rogue web sites.

    Minimizing grey markets and online MAP violators requires a comprehensive approach that goes much further than simply enlisting a price monitoring service.   And that, I can assure you, is money in the bank.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com) and can be reached via e-mail at dcoleman@brandoogle.com. Brandoogle works with both Retailers and Brands to improve margins and combat grey markets using a proprietary suite of software and services.

     

     

     

     

  • Are Brands at Risk of Identity Theft?

    15 million victims lose $50 billion a year, In the U.S. alone. Identity theft has exploded because of technology, but people aren’t the only ones at risk. As counterfeiters get more sophisticated, brands become just as vulnerable.

    I would imagine that most people who buy a fake Rolex watch or fake Gucci bag are well aware that they are not purchasing the genuine article. After all, luxury brands rarely choose flea markets or back alleys as their retail venues of choice.

    Unfortunately, counterfeiting is not limited to luxury items. Counterfeiting has expanded into many product categories that most consumers would never suspect, even life critical products. Dietary supplements, medical supplies, auto parts, safety devices, and even infant products are now at risk. While most consumers would never buy these items from flea markets, they certainly would purchase them online if it meant saving a few dollars.

    To make matters worse, counterfeiters have gotten much better at marketing their products online. They’re now producing very credible looking websites, complete with glowing customer reviews.

    Even if the consumer does their research, they generally research the product, not the seller. Unfortunately, most consumers have a limited understanding of the risk posed by counterfeiting and would never suspect it to be life threatening.

    If a counterfeit product were to maim or kill a consumer, that brand would be facing a public relations nightmare. The incident would certainly hurt that brand’s sales and could even force them into bankruptcy. In our world of 24 hour news cycles and instant social media word-of-mouth, a brand could be destroyed before counterfeiting is even identified as a factor.

    On the surface, Brands seem to be faced with an impossible task: How can they, Brands, possibly begin to locate all the possible websites selling counterfeit goods?

    Fortunately, just as counterfeiters have evolved to exploit the advances in technology, brand protection services have become much more adept at scanning the internet for “problem websites”, and developing remediation strategies.  One of the tell-tale signs that a branded product may be a counterfeit is an unreasonably low price. By scanning the web, a brand can see not only which websites are in violation of Minimum Advertised Pricing (MAP) policies, but may also have the ability to detect the presence of possible counterfeit goods. Even the smallest brands that have limited budgets for market research can now have access to the sophisticated tools that the bigger brands use to protect their brand equity, product identity, and pricing strategies.  These services are not only affordable, but generally cost a fraction of product liability insurance.

    Like most things in this world, an ounce of prevention is worth a pound of cure.  In this case, a solid internet monitoring process could save lives.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com).   Brandoogle works with retailers and brands to help protect brand equity and deliver consistent pricing integrity across channels using a proprietary suite of software and services.  He can be reached via e-mail at dcoleman@brandoogle.com.

    Stats Source = http://www.identitytheft.info/victims.aspx)

     

  • Channel Conflict…The Ugly Truth About Growing On-line Sales

    “Increasing our on-line penetration is the key to our future sales growth.” This line has been uttered so many times, in so many ways, by so many corporate leaders in CPG, in the last five years that it now falls into its own special class of cliché. On the surface this phrase makes perfect sense. The internet is the fastest growing sales channel, and every corporate leader should make the internet channel a part of their growth strategy. The truth however, is a little more complicated. The economy has been growing at an anemic pace for the past several years, and therefore, the growth of internet sales must be coming at the expense of another sector. That sector is traditional brick and mortar retail.

    Are these corporate leaders suggesting that their companies abandon their traditional retail sales channels? Probably not. Unless the sales generated from the on-line channel are incremental, and not cannibalistic in nature, increasing on-line sales will not automatically lead to sales growth.

    An argument could certainly be made that very few companies can honestly claim that the internet has actually created new demand, demand that hitherto did not exist. They may have created new points of sale, but not necessarily new demand. Quite the opposite in fact. A disproportionate number of internet sales are probably just sales that historically would have occurred at traditional retail.

    Why does any of this matter? In the stampede to grow the internet channel a number of corporations have tried to get their product on-line on as many websites as possible, with very little thought to the longer term consequences. No self-respecting brand would want their product sold at a flea market, yet in the rush to get maximum on-line penetration, a number of brands are now available at the metaphorical equivalent of on-line flea markets. Not only does this seriously undermine the exclusivity of the brand, and diminish its brand equity, but it also creates a very nasty channel conflict problem.

    In short, once an item is available on-line at multiple websites, the only way for the web sellers to differentiate themselves from each other, and win the sale, is to compete on price. Real brands don’t compete on price, they compete on a platform of exclusivity, and differentiating features. That’s why they spend so much time and energy on marketing, advertising, and brand management.

    The channel conflict problem occurs when the brand’s traditional brick and mortar retailers, those who promote the ideals and exclusivity of the brand, and sell the brand at full price, find themselves competing with on-line low price leaders. These retailers are getting hurt by the brands misguided foray into “on-line sales penetration”. So as internet sales increase for the brand, it’s coming at the expense of their traditional brick and mortar retail customers. This channel conflict makes true sales growth an elusive opportunity. Worse yet, a brand that has undisciplined distribution on the internet risks losing a major brick and mortar retail account.

    What should brands do to avoid falling into this trap, and still grow their business? Do the same thing consumers do, shop around. Find a web partners that will promote the brand ideals, offer great customer service, and will honor pricing guidelines. All these websites ask in return is that the brand rigorously maintain a clean web presence, and not sell to “price only” internet flea markets. Seems fair. The brand gets great on-line penetration with great on-line partners, and does so without diminishing the true value of the brand or alienating their existing retail accounts. I think that’s what the corporate leaders have been meaning to say all along.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com) and can be reached via e-mail at dcoleman@brandoogle.com. Brandoogle works with both Retailers and Brands to improve margins and combat showrooming using a proprietary suite of software and services.

  • Spot the Artist’s Mistake…A.K.A. Digital Marketing Defense

    It’s been said that a picture is worth a thousand words, and the explosion in digital media would tend to support that conclusion. In fact, a large part of marketing is “imagery management” and the concept of “association”. Certain things go together to help create concept. Very clean black and white cows, in a green field, with a bright blue sky with little white clouds all work together to harness the concept of “the freshest, most wholesome, most delicious milk on earth”. Certainly that image is considerably more compelling than a picture showing a sweating one gallon jug of milk sitting on a poorly lit shelf in the refrigerator section of a grocery store. That’s why imagery matters, and why association matters. How things are visually perceived is plays an even larger role now in brand messaging, than ever, as so many ideas are communicated through images rather than text.

    Unfortunately, brands can sometimes find themselves victims of association errors. Metaphorically speaking, association errors are very similar to the “spot the artist’s mistake” puzzles, and occur when brand images appear in the wrong places. By way of example, you wouldn’t expect to find high end watches for sale in a traditional brick and mortar vitamin store, simply because brand managers know that that’s not the best way to promote the value and exclusivity of the brand. That said, I recently discovered high end watches for sale on a discount vitamin web site. In my role as an internet brand monitor I see these kinds of association errors all too often.

    The problem is, that in the chaotic environment of the web, marketing managers don’t always have complete control of band imagery or messaging. In the current web landscape, any unauthorized re-seller of a brand can post the host’s product in places that completely muddle brand imagery and messaging. Like, I suppose, steeply discounting branded watches on a vitamin website.

    To maximize the digital impact of the brand, today’s marketing manager needs not only a solid foundation in digital brand offense, they must also dedicate some of their time, efforts, and resources to brand defense: Ensuring that the brand imagery and messaging are not being diluted by inappropriate pricing and presentation on the web. In order to deliver a consistent message, it’s important to ensure mechanisms are in place to “spot the artist’s mistake” before the incorrect brand image is ingrained in the minds of the target audience forever.

  • Managing the Brand “Experience”

    How can a brand possibly deliver a consistent experience, if they don’t even know all the potential points-of-sale? The simple answer is they can’t.

    I recently had the pleasure of attending the BRITE conference at the Columbia Business School. This world class conference is focused on the intersection between brands, technology and innovation. The overarching theme of this year’s symposium was “brand is an experience”. How do brands emotionally connect with their target audience? What experience can the brand create that moves a customer beyond loyalty and move them to a state of evangelism? And how do we achieve such lofty goals pre-sale, at the point of purchase, and after the sale?  Given the increasing inter-connectivity brought about by mobile, social media, digital interface, and apps, as well as “old world” channels, delivering consistency across mediums is becoming a herculean task. BRITE did a terrific job of helping brands understand how to promote consistent “brand experiences” in this very complex environment.

    The concept of “promoting” an experience is built on the fundamental belief that we know where we are going to engage the target customer. We focus on reaching them where they are. Which retailers they frequent, what magazines they read, what web-sites they visit, what TV shows they watch and the list goes on and on. But what if target customers are engaging with us in places we don’t know about? What then?

    Having worked in brand and supply chain management roles over the last 15 years, it has been my experience that increasingly brands don’t know all the places they are engaging customers. With the explosion of e-commerce accessibility to both buyers and sellers, many, if not most, brands can’t definitively say they know every outlet that their product is presented for sale, nor the prices offered. This is becoming a huge problem.

    When product is for sale at outlets that don’t “share the ideals of the brand” (specifically rogue web-sites), delivering the desired brand experience is going to be a challenge. If anything, all the efforts in product development, marketing, brand and pricing strategies can be undone with a few clicks of the mouse. Channel discipline weaknesses on the part of brands are being exploited by an increasing number of web-sites focused on offering “lowest price available”, not promoting brand stories, brand experience, or brand value.

    By way of example, Justcalculators.com sells branded watches, along with a number of other branded goods, at very steep discounts on their web-site. (In fairness, they do sell some calculators on this web-site as well.) Hardly the “brand experience” or consistency of message the marketing and brand people at the watch companies had hoped for, or anticipated.
    Even with all the changes afoot, brand management still goes back to the fundamentals. Product, Place, Price, Promotion. Great brand management, and great brand experiences, requires that not only is product in the right places, at the right prices…it also requires that managers ensure that product is not in the wrong places at the wrong prices.

    David Coleman is the CEO and Founder of Brandoogle (brandoogle.com). Brandoogle works with retailers and brands to combat showrooming with a proprietary suite of software and services. He can be reached via e-mail at dcoleman@brandoogle.com.