Anxiety floods the boardroom, the conference
rooms, every decision. Costs are rising. Returns are flat. Margins are
thinning. Now, private label competitors are beating us in every area:
technology, price, placement, design, and sales. Worse, they have turned the
category that we invented into a commoditized war zone and keep us in a
rigid box that controls every factor of our influence and gives them every
advantage.
At this point, most companies who can relate to
the above scenario make a horrible misstep, line extending their current
product line. They assume that more lines in the water equal growth. While this
theory may sell a few more SKUs, in reality it feeds an addictive mindset: more
is better. The issues compound. Now, that the brand name hits the shelves with
a new line, private label flanks their move and copies their makes and models.
The universe of decisions, already too rich with choices for even the most
discerning consumer, expands.
the above scenario make a horrible misstep, line extending their current
product line. They assume that more lines in the water equal growth. While this
theory may sell a few more SKUs, in reality it feeds an addictive mindset: more
is better. The issues compound. Now, that the brand name hits the shelves with
a new line, private label flanks their move and copies their makes and models.
The universe of decisions, already too rich with choices for even the most
discerning consumer, expands.
While consumers are reeling amidst a bad-shopping
experience, the competitors are fighting it out over new features that only they
will understand. The race is on, but the game is fixed.
experience, the competitors are fighting it out over new features that only they
will understand. The race is on, but the game is fixed.
At this point a novel, industry-wide technology
trend may appear. Even though your company is not the major player (the
platform), the default thinking inside the company is that this wave'despite
slow as molasses market adoption'represents a way out. Indeed, this technology
wave may break the deadlock of our existence. Thought through, though, this
area is merely another distribution channel where we are a minor player without
much authority or autonomy. So, symbolically speaking, taking the mask off of
the mass retailer and putting it on the face of the connectivity giant. As the
Who sang, 'meet the new boss, same as the old boss.'
trend may appear. Even though your company is not the major player (the
platform), the default thinking inside the company is that this wave'despite
slow as molasses market adoption'represents a way out. Indeed, this technology
wave may break the deadlock of our existence. Thought through, though, this
area is merely another distribution channel where we are a minor player without
much authority or autonomy. So, symbolically speaking, taking the mask off of
the mass retailer and putting it on the face of the connectivity giant. As the
Who sang, 'meet the new boss, same as the old boss.'
The essence of the issue at hand is brand
management, coupled with product management and innovation. Given the
feature-creep galore and fixed mindset, no one is taking risks to be a market
leader. The equity of the brand'and the category'was sold up river and now
every circuit of the business is plugged into the losing game, without the
saving grace of brave actions taken to re-establish market leadership.
management, coupled with product management and innovation. Given the
feature-creep galore and fixed mindset, no one is taking risks to be a market
leader. The equity of the brand'and the category'was sold up river and now
every circuit of the business is plugged into the losing game, without the
saving grace of brave actions taken to re-establish market leadership.
Our advice: change the mid of the category.
Invert the thinking around the category. Start with the product line. In the
above scenario, more is not more. More is less: less margin, less profit, less
market share. Trimming the product line into a few to several choices will do
three, key things.
Invert the thinking around the category. Start with the product line. In the
above scenario, more is not more. More is less: less margin, less profit, less
market share. Trimming the product line into a few to several choices will do
three, key things.
(1)First off, having fewer products means more
standardization and less parts; less costs.
standardization and less parts; less costs.
(2) Second, fewer choices have been
proven to be a good thing for driving consumer preference and brand protection.
proven to be a good thing for driving consumer preference and brand protection.
(3) Third, focus.
With fewer products, the company can reinvent itself with a focus
that is not spread across an acre-long spreadsheet of poorly performing, me-too
products.
that is not spread across an acre-long spreadsheet of poorly performing, me-too
products.
Yes, it seems counter intuitive, but it the
retail game of brand verses private label, less is more.
retail game of brand verses private label, less is more.
Michael Graber is the
managing partner of the Southern Growth Studio, an innovation and strategic
growth firm based in Memphis, TN. Visit www.southerngrowthstudio.com to learn more.
managing partner of the Southern Growth Studio, an innovation and strategic
growth firm based in Memphis, TN. Visit www.southerngrowthstudio.com to learn more.