Brand building is a process for everybody. The generic brand needs to live under the protection of another brand. If your brand is generic, it just means that someone else has the control. If you want to evolve, improve and drive that process, you need to create your brand.
Generic vs. Brand
All the products have a brand. The goods in the supermarket, fresh products, and also the industrial goods.
- Generic brands take the name of the supermarket. From the consumer’s point of view, the supermarket is responsible. It is the face of the product. The supermarket chooses the supplier that will make the product. They influence the characteristics that it will have, too.
- Fresh products in a local market have the brand of the stall or the name of the person who sells them.
- Industrial goods become part of the brand of the company that sells them.
Everything has a brand. You can design and control it, or you will have to live under the protection of someone else. In the last case, someone else will decide for you.
Building something for another brand could be the first approach. It is a way to enter the market and build an infrastructure. But it is not sustainable in the long run. If they want to progress, they will need to create a brand.
I will describe the brand building process in three big stages.
1- Manufacture without a brand
In developing countries, it is common to fabricate products for other brands. It is the first step towards capitalism. That allows them to focus on their advantage, a cheap labor market. It also let them avoid the risks of investing in research and marketing.
We can see a parallel case in developed countries. Here there are also many companies that manufacture products without a brand. In that case, the price becomes the most important aspect. It is necessary to produce the product at a reasonable quality for the lowest possible price. That puts the producer in a vulnerable situation. There will always be people willing to do the same product at a lower price. They could have different reasons:
- There is always a country where something is cheaper than in your country. No matter where you are. It could be the cost of living, the suppliers, the labor force, the materials.
- Some people can offer low prices because they are in the black market. Perhaps, they work at home. Maybe they do not pay taxes. Sometimes, they only declare some of their products.
- Some firms have low costs because they have less infrastructure or different technology.
- Some young workers accept anything. At that stage, salary is not relevant they want to learn and put a foot on the door.
2- Create a brand and sell close
If it is unbranded, it 's hard to communicate what makes the product different. The primary features and the price are the fastest way to go. But when the price is the only difference, many competitors appear. There is always someone that can do the same at a lower price.
If a company wants to compete with the price, it needs lower manufacturing costs. It must be something that is hard to copy. Technology can be a key point to organize and consolidate that position. Next step is to create a brand to protect that competitive advantage. It will emphasize what makes the product unique in the eyes of the consumer.
The company can sell products at a higher price when they have a brand. They will have to invest in technology and innovation to differentiate that product. Then, the company will need marketing to communicate the difference. Consumers need to understand and appreciate what is unique.
Many European and American companies moved manufacturing abroad. Countries like Taiwan and Korea were the first beneficiaries. Now Taiwan follows the same route and moves some of its production to China. At this point, they have to concentrate their efforts on technology and brand. Firms like Acer and BenQ have done the change.
The most established companies could make a gradual transition. Some of the production is under their brand and with proprietary technology. At the same time, they keep on working for other brands. In Korea, for example, companies like Samsung no longer compete in price. Now they make a clear bet for technology, design, and brand.
The brand building process described is starting in China. Just 15 years ago, the Chinese market was very fragmented. Each province had its companies. Reforms in the 90s have created a middle class, which made larger sales areas possible. A national market is emerging. This evolution allows some brands to sell in the Chinese market as a whole.
3- Create global brands
The next step for brands is to go abroad. They should establish distribution to bring the product to the consumer. They need a network of sales and services. On the other hand, they need a communication strategy to let consumers know the brand.
In all countries, there are companies in any of the three phases.
In China, for instance, there are some firms in phase 1. They manufacture products for Western brands. Others sell their products with a name and design with personality. Sometimes in those cases, there is not a coordinated strategy to create a brand yet. That is all part of a process.
Small firms, developed countries
The dichotomy generic vs. brand has no sense anymore. Everything has a brand. The question is who has the control.
In western countries, most firms are in phase 2 or 3, but we can find many stage 1 companies – those without a brand – as well. The brand building process is uneven in each sector. I think that it is an evolution that we will see everywhere.
If branding is still not important, to bet on this could be innovation today. If you wait, it could be a defensive strategy for sheer survival.