Well, I want to spend today writing about what happens if you decide not to build a boutique brand but instead focus on being a commodity. There is nothing wrong with being a commodity. Your company can do very well as such a player, but it does provide some messaging differences for Branding. To start, the easiest thing to do is to think about what is known as being "Cheap and Cheerful". That means a no frills approach to doing business. This does not imply poor quality product, just something that doesn't have bells and whistles. If I look at cars for a second, imagine a car today without power windows. You don't NEED power windows but most models have them. And it keeps going. Imagine your car without the extras. No power seats, no power steering, no automatic transmission, and no power brakes. When I was a kid, that was the base model of every car. Heck even a Radio and Seat Belts cost extra. Because the models we examine have the extras, we don't tend to look at the costs imposed.
Let me run you some cost numbers, I have gotten into recently. My son wondered if I wanted a Keurig machine to replace my coffee maker. I am a big coffee drinker and I had thought about this many times. Well, I went to a store and found that K-cups in my local Safeway go for around $0.70 each. I did some Googling and some math and found 12-oz bag coffee ran me about $0.23 a cup. So, Keurig has done a GREAT job of building a boutique brand. But I looked at those numbers and said, that I would keep my existing coffee maker. However, I do want to point out that a mid-sized Starbucks Coffee (a Grande) goes for just over $2.00 a cup. Makes you think about how you are spending your money on coffee eh?
Which is the point of a Commodity Brand. Why am I spending all that money on frills? Do I really need or want a Nordstrom experience when I just want to buy Underwear? Can I get a good value for them at Target? So, when you build a commodity it is all about delivering solid value at a good price. You will sell more volume than your Boutique Competition, but your profit per sale will be lower. This means you have to be ruthless about cost across the board. This is especially true when it comes to Marketing and Advertising. Which is where we will get to next week.
Jim Sackman Focal Point Business Coaching Business Coaching, Executive Training, Sales Training, Marketing
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