The last decade has seen increased attention paid to what a brand stands for, beyond the product they sell. No longer do consumers simply want a good product – they want to stand for something they believe in at the same time. Tom’s Shoes gives a pair of shoes to the less fortunate for every pair purchased. Patagonia represents sustainable manufacturing for outdoor gear. American Apparel says no to overseas sweatshops and child labor. Apple designs products that push the status-quo and embrace the elegance of simplicity.
What a wonderful world it is. Unfortunately, there is one problem with all of these brands â they are all quite expensive. You have to pay a hefty premium to buy an iPod rather than a Zune, an American Apparel v-neck rather than Hanes, a Patagonia rain jacket rather than one from Walmart, and a pair of Tom’s Shoes rather than a pair from H&M. Not everyone has the luxury of expendable income to pay a 2x markup, but I’m sure they would still like to stand for something through their purchases.
Let’s forget about clothing and technology for a moment and examine a much smaller scale. Can the same stances be taken for highly commoditized goods as well? The definition of a commodity is that you don’t care which one you have because they are all the same. One brand’s iodized salt is identical to the next. But instead of looking so closely at the product, let’s look at the brand itself.
Let’s say you have two brands selling salt. Bradley’s costs $1.00 and Chuck’s costs $1.05. You know that they sell identical products, so logically you would choose the cheaper option. Now for the twist. Bradley’s ships their salt to the store on sleighs pulled by puppies and aren’t shy about using their whips to get moving faster. Chuck’s is a brand that came about to provide a direct foil to Bradley’s â they ship their salt by truck and donate 1% of all profits to PETA. Now which brand would you buy?
Of course, a 5% premium doesn’t sound so bad now! But even more importantly than the fact that it is a 5% premium, it is a 5 cent premium â something that is accessible for everyone who buys salt (which cannot be said about premium brands like Patagonia and Apple).
Some questions come out of this thought experiment. Is there a margin for any commoditized product that can be successfully taken by a ârighteousâ brand? Is it only an option when the established brands are bad? What about neutral? Can these “righteous” brands come into existence without a marketing budget that would kill their narrow margins above commodity prices?
The change of Shell gas stations to Z gas stations in New Zealand got me thinking about this (btw pronounced “Zed” because kiwis follow British English for the most part). A New Zealand fund bought the 226 Shell gas stations in the country and are attempting to turn it into a source of pride – taking call center and IT jobs back within the country, selling NZ pies rather than Australian, and creating jobs by introducing full service gas pumpers. Is there anything that is more of a commodity than gas? And yet, which would you choose if you were a kiwi and the price difference were mere cents?
Photo: collective nouns