Your Better-For-You Brand is Not a Commodity

Commodity (n.) — A reasonably interchangeable good or material, bought and sold freely as an article of commerce. Commodities include agricultural products, fuels, and metals, and are traded in bulk on a commodity exchange or spot market.

Is your brand a commodity? “Of course not,” you think. “Lots of people buy our product because they love us. We’re always launching new flavors so we can stay ahead of the competition. We’re killing it in Target stores.”

Based on your answer, though, we’d argue that you do think of your brand as a commodity. The CEOs and CMOs we meet who see their brands as a commodity are the ones who define success solely through margin and ROI and channels. They’re all about the facts and figures; they’re not thinking of the brand’s impact and relevance with the consumer. They’ve set out to make as much money as possible — and they’ve built a marketing strategy that drives profit over promise.

Look at the nutrition bar category — as ripe for commodification as any product sector. Nutrition bars are a hot category; they’ve evolved from yesterday’s oat-based granola bars to today’s protein-packed functional foods. They have a form factor and convenience that consumers need to eat on the go, and they’re relatively inexpensive to develop, manufacture, package, and distribute. Global companies and startups have discovered that they can make something of reasonable quality and charge enough money to make a decent margin. We call this the “Amazonification” of better-for-you brands.

But quality and margin do not make a brand. Your brand is not your product, your logo, or your tagline.

Rather, let’s use our preferred definition: Your brand is your promise and the way you keep it.

Building a Brand on Promise, Not Product

Look again at the nutrition bar category. Why do Clif Bar and KIND continue to dominate that category over such a long period of time? After all, they weren’t the first brands to feature clean, organic ingredients or or drizzle chocolate over nuts. They’ve survived and thrived because of their promises: Clif’s vow to fuel adventure and KIND’s mission to support a better culture and planet.

Both Clif and KIND lead with the brand’s impact, its reason for being. They stand for something other than, “This is a bar made from food that is wrapped in plastic that you can drop into a backpack.”

When BFY brand leaders come to us for guidance, it often becomes apparent that their business challenges — perhaps they’re struggling to gain wider audience or getting whacked by a new competitor — are bigger than they realize. They think they need a new brand mark; in reality, they need a brand WHY.

We ask key questions of our clients early in the process: What societal wrong can they change? Which enemy can they combat? What problem can they fix? How do they make people’s lives better?

Considering the brand — not just the product but the business itself — from that perspective makes a product offering that would otherwise be parity to the category into something unique and powerful.

Creating Greater Brand Value

A brand with purpose is future-proof, because it can withstand shifting consumer and retail trends. Commodity brands constantly have to churn out new flavors and ingredients just to stay relevant; purposeful brands have a true north that’s forever attractive to consumers.

What’s more, a brand’s value is based on its WHY. In a merger, sale, or acquisition, the company’s valuation — in other words, the potential value of this company in the future so we can understand how much to pay for it now — is based upon relevance and differentiation and acceptance, not just the current balance sheet.

Again, let’s look at the bar category: RXBAR was not worth on paper the $600 million that Kellogg paid for it; the price wasn’t based on current revenue ($130 million in sales at the time), but on revenue over the course of the ownership. RXBAR’s promise is “simple ingredients, no BS. The multiple of more than 4X is based on the brand’s promise and its relationship with its devotees.

The downside to being a commodity, of course, is the brand’s inevitable demise. Anyone can make and sell anything; somebody somewhere will knock off your product — and it won’t just be a competitor, but likely one of your important retail partners.

And the remedy for being a commodity brand is to dig deep into your DNA to understand your WHY. You have to know what your brand stands for and what the consumer needs; that is your brand, not just the new flavors or ingredients you introduce.

BFY brands follow a life cycle that our founder and chief strategist David Lemley has defined in his new book, Beloved & Dominant Brands. The company is first to market with an innovative product, then becomes one of many competitors — a commoditized brand. The way out, to what we call Beloved & Dominant status where you have an army of loyal fans and a position of category leadership, is to lead with your WHY.

Remember: Your brand is your promise and the way you keep it. And a promise can’t be commoditized.

If, by now, you’ve re-thought your answer to the question at the lead of this article, we need to talk. And you might be interested in checking out David’s new book, Beloved & Dominant Brands.