Today I received news about a large supplier of a particular branded product that has made the decision to withdraw their highly sought-after and high profile branded products from a large number of retailers who haven’t been able to achieve expected levels of consumer sales with this product – versus other retailers.
In some cases this particular product represents between 20 – 40 % of the affected retailers’ total sales turnover. So the withdrawal of this product may have a considerable impact on the sustainability of the affected businesses.
Some years ago I prepared a paper and submitted this to a director of the affected company pointing-out the importance of this company building the profile/ market penetration of its own brand far more so than rely on the brand profile of those products which they represent under their banner. Why should this concentration of effort be justified ?
Because if a retailer chooses to rely on the profile of product brands, it exposes itself to the possibility that one day they may not have access to that brand (which is now the case of the aforementioned retailer), and as a consequence the retailer may stop being frequented/ visited/ connected with by those customers who once used to connect with the business primarily to purchase that product which the retailer no longer has access to.
As astute business people know, the popularity of brands comes and goes – many branded products in particular typically move through a relatively short product life-cycle. A product brand that is “hot” for a few months or years, can lose its popularity (customer demand) and therefore impact adversely on the sales achievement of the B2C business concerned. It is prudent to concentrate on building the profile/ presence/ awareness of a BUSINESS brand, to then smooth-out sales revenue fluctuations as individual product brands stocked by the given business move through their respective life-cycles.
The danger of putting the majority of your available stock procurement budget in one nest (i.e. concentrating most of your available budget on a strong product line) is that one day the enviable customer demand that this product line has enjoyed for some time may come to an end – or your business may have its access to this product discontinued. Try and build customer demand in relation to your “business entity” as a whole, and in doing so reduce at least some of your risk exposure relating to product life cycle fluctuations. This is the art of “brand positioning”.