Future of branded products 2020- some suggested strategic options

Branded managers are struggling to manage and maintain brand equity of products that they have in their portfolios. This challenge has become especially acute after the global financial markets meltdown of 2008.

2008 has not put a stop to new branded product launches in developing and developed markets, in urban and rural markets- studies and data suggest that nimble competitors, copy cat challengers have seen opportunities in these tough times and launched branded products in markets, big and small. This is adding to the stress faced by brand managers across markets.

Increasing competition, despite the apparently tough market conditions, will be a reality that all brand managers will have to accept and live with from now on.

So what should the brand managers do?

After detailed discussions with professionals in marketing, thought leaders known to me and countless references to study materials provided by my marketing professor at the HULT Business School, Boston, I believe that 3 options are clearly available to the brand manager today to not only take on increasing competition, but also create a competitive advantage over close competitors as well as future entrants in the same markets.

Option 1- NICHE MARKET BRANDS

Branded products are widely available in urban markets across the globe, and they are slowly making inroads into lucrative rural markets of emerging economies. As soon as a brand manages to establish its consumer base, a competitor follows. However, if the brand manager were to adhere to the basics of consumer analytics, unmet needs will be unearthed, and these unmet needs would form the basis of a sound brand and marketing strategy that can sustain profits in a market that is turning competitive by the day.

Option 2- ADD service to the product and offer a SOLUTION

Branded products are offered just as products and nothing more to consumers. So is the case with branded products offered by competitors? So the question arises- what can established brand with first mover advantage, now faced with price driven competition do different, that will offer discernible value to the consumer, that differentiates your offer dramatically from that of your competitor or the imitator?

The key to this dramatic difference is SERVICE.

Product+ Service= Solution

So what “Services” are customers looking for today? Some options to consider may be

  • Product financing options.
  • Free door delivery.
  • Free service and spare parts.
  • Extended warranty and guarantee.

 

Option 3- Enter BOP (Bottom of Pyramid) Markets

Brand managers find developing and deploying a go-to-market strategy for BOP markets extremely challenging and to some extent, apparently, they are indeed challenging.

Limited economic means in the BOP consumer segments, poor infrastructure, poor connectivity, lack of access to markets and cheap substitutes are some challenges facing the brand manager in the BOP markets; but are these challenges for real?

In close analysis one finds that despite the apparent challenges mentioned above, there are definite positives in these markets- namely

  • You have a golden opportunity to gain the first mover advantage in these markets and your competitors have most likely not made a foray into these markets because of numerous reasons (financial mostly, which you will not face)
  • BOP consumers are very traditional in their outlook – and this consumer behavior can be translated to establish strong (traditional) brand preference which will be rock solid and virtually impossible to dislodge, even when a “me too” imitator or competitor attempts to enter this market with lower prices.

Competitive advantage in a cluttered and globally seamless market is a scarce commodity and brand managers would do well to master the following skill sets that would be best utilized to exercise the above mentioned options and thus gain that critical advantage.

  • Systems to capture data from all consumers touch points.
  • Data analytics.
  • Consumer insights.
  • Knowledge of services.

brand protection

The brazen cry of packaging counterfeiters is, Catch me if you can!”

Worldwide brand theft is costing companies more than $400 billion annually in revenues and is growing at an alarming rate of up to 15% a year. The World Health Organization (WHO) estimates that 10% of the global drug market is made up of fake products in fake packages. Not only does counterfeiting lead to revenue loss and brand defamation, it undermines security, placing consumers directly in harm’s way.

But the good news is this–since October, 2002, a team funded by the Food and Drug Administration (FDA)–made up of members from the Physical Science Laboratory at New Mexico State, Axess Technologies, Reconnaissance International and Sigma 4 Inc.–has been assessing a range of technologies to wage war against counterfeiting.

Four leading technologies that help thwart brand theft and counterfeiting include:

* Radio frequency identification (RFID)

* Chipless RFID and coded taggants

* Latent image technology (LIT)

* Optically variable devices (OVDs)

Low cost RFID on the rise

Knowing where your products are is “as valuable as knowing your bank balance.” And keeping track of your products can keep counterfeiters at bay.

RFID tags or chips allow brand owners, packagers and retailers to “talk” to their products from the beginning to the end of the supply chain. Tags can contain a range of information about a product, including manufacturing and packaging facility locations, packaging line runs, date codes, product ingredients, packaging supplier data and logos. Tags can be sandwiched between layers of plastic or paperboard used for packaging and paper or film used for labels. RFID readers are then placed all along the supply chain, following a product and its package ensuring its authenticity and safety.

However, one of RFID’s major stumbling blocks has been high cost. Typically, RFID chips can run up to $1.00 of more per tag. But as chips get thinner and smaller, it is estimated that RFID costs will dip down to the 10 to 20 cents per chip range. RFID experts say that cost will lessen as RFID manufacturers develop cheaper tags while increasing production volumes.

One current case in point illustrates the scope of RFID and its potential decrease in cost. The Gillette Co. recently announced the purchase of 500 million low-cost RFID tags (some sources say the tags cost around 10 cents apiece but this price could not be confirmed) from Alien Technology for tagging cases and packages of expensive razors.

This is the first major commercial order for products incorporating an electronic product code (EPC), which was developed by the Auto-ID Center at the Massachusetts Institute of Technology. This technology is manufactured using Alien Technology’s patented “Fluidic Self-Assembly,” allowing tiny integrated circuits to be cost-effectively handled and packaged into EPC tags in large volumes.

An RFID EPC tagged label is affixed to a package and can be used to track a product through its lifecycle. EPC tagged labels are more than a radio “bar code” because they contain individual item serial numbers, manufacturing location, date codes, product to package comparison and other supply chain data.

Getting ready for a potential RFID explosion, SATO America Inc., in conjunction with CCL Label is currently offering a way to produce labels with RFID capability. SATO’s RFID kit for its CL408e and CL412e printers allows the printing of labels embedded with RFID chips. The kit also programs the chips by downloading product/packaging information directly into the chip and activating it at the same time as printing.

Where’s the chips?

Mention RFID and packagers may automatically think in terms of chips/tags, unwieldy readers and high cost. But a chipless RFID technology has been developed and licensed by a company called Inkode. The Inkode system involves embedding tiny metal fibers–called Taggents[TM]–into plastic and paper or any other materials that radio frequency waves can penetrate. These microscopic particles are energized by low power and respond when “excited” by radio frequency waves.

Used as a checks and balance system, Taggents can be embedded in the same area as a bar code on a package. Using a unique serial number, you can ensure there is a match between the Taggent and the bar code and what is supposed to be in the package. The serial number can be linked to a database, which can house supply chain information for packaging tracking purposes.

Two potential packaging applications where Inkode Taggents can be embedded are in meat labels to trace the product back to the meat packing company and pharmaceutical labels as a way of authenticating drugs. The cost for Taggents can be as low as one cent depending on the application and volume needed.

Similar to Inkode Taggents are microparticle taggants, which are encoded data-infused microparticles that can be incorporated into packaging materials such as paper, coatings, film and adhesives.