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Can a commodity business have a brand?

I sometimes hear the argument that certain kinds of products can’t be branded—they are commodities, highly-priced competitive and no different from one to the other. But unless the product is sold in a true commodities marketplace, like a bidding exchange, there is room for a brand to create an edge. In fact, the brand may be the entire difference between one version of the product and another.

Case in point: GEICO. Yes, the brand fronted for 20 years now by a gecko lizard is operating in a commodity environment, at least that’s been their strategy for more than two decades. They recognized then that auto insurance was essentially the same. You get a certain amount of coverage for a certain amount of premium. They offered a lower price and ease of service promise summed up by the infamous tagline burned into the brains of all Americans, “15 minutes could save you 15 percent or more on your car insurance.”

Don’t believe GEICO is using a commodity strategy? Then wherein their principal advertising messages do they ever make a claim that their insurance is better? They don’t. Sure, they’ve occasionally talked about their claims service also being easy to navigate. But they don’t tout mobile apps, or safe-driving discounts, or accident forgiveness. They simply say, in a multitude of creative and entertaining ways, that for just a few minutes of your time, they can save you money on car insurance. GEICO is a very strong brand operating with a commodity mentality for their product.

Remember “generic” products? These once took the bottom shelf of many a supermarket aisle and offered food basics like rice or sugar or macaroni, often in black and white packages that merely stated what was inside them. They were unbranded, the cheapest option available—the commodity of the category—and guess what? They didn’t sell. People were unsure of the quality of its origins, but most of all, they had a branded option that they trusted more, despite (or maybe because of) its higher price.

Today, every supermarket chain of any size has developed at least one in-house brand, for example, Kirkland Signature by Costco. Brands like Kirkland still stake out the value-price rung of the ladder, but they have invested in professional package design and include messaging touting their quality. The world’s largest supermarket chain, Kroger, has 16 house brands, such as Home Chef and Simple Truth, its natural and organics product line.

The supermarket industry has realized that even the lowest-priced options require a well-thought-out brand. These brands don’t have the marketing power or distribution of established national brands, but what they lack in million-dollar marketing budgets they can make up for with free access to their own shelf space.

So for products where there is highly competitive pricing, breaking the tie between your product and a competitor’s may come down to perceptions of the two brands and nothing else.  Even if the products and the price are identical, there will still be perceptions of who has the best service, which has more reliable delivery, or friendlier staff, or which one can save you 15 percent or more on your car insurance in just 15 minutes.

David Taylor – Submitted

David Taylor is president of Lancaster-based Taylor Brand Group, which specializes in brand development and marketing technology. Contact him via www.taylorbrandgroup.com.

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