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November 10, 2004

The Value of a Brand -- Part 1

Whether it is products or elections, Brand A beats Brand B because Brand A does a far better job defining itself -- and its value. In this election, as in home furnishings, Brand B found itself being defined by the other side. If you don't control your brand, you lose.

So what exactly is a brand? Brand is more than your name and logo -- it is the inherent value that is perceived behind the name. A good technical description is found at the International Trademark Association's site, and marketers like Philip Kotler have written tomes on the subject.

Furnishing manufacturers do a terrible job branding themselves and as a result sales are down, plants are closing, and offshore assembly lines are beating their pants. Manufacturers have allowed the retailer to define their products for so long -- that save for a handful like Thomasville and Ethan Allen -- there is no known perceived value.

Needing the retailer as their outlets, they caved to pressure and let the retailers subvert their brands. Go into any store and look under the covers, and in about 80% of the time, you will not find a manufacture's label. This isn't good for the maker nor the consumer. How can someone make an informed decision if they don't know anything about a product?

Kitchen appliances are just the opposite -- the manufacturer controls the brand from assembly to sale. The margins are much lower for the retailer -- who finds him/herself in a commodity pricing game. But the retailer has adopted by offering services -- adding designers and custom work, charging for delivery and installation.

Furniture retailers have held the manufacturers hostage for year. One US domestic maker told me he has lost retailers because he put his products on his own website. Another told me he shut his website down because of angry yowls.

What do you makers get for this loyalty? Two large chains closed this year, turning off customers who lost deposits and shutting down outlets for manufacturers who otherwise gave up the consumer. On top of that, your business is down because the retailer is buying a cheap knockoff of your design. (Some of you tell me you won't put your images on the web for fear of the designs being ripped off. This is tantamount to putting an alligator-filled moat around a store so you won't get robbed. You won't get buyers either.)

What to do? Read my next post and I'll illustrate how the balance can tip more fairly to the manufacturers and the consumers, and savvy retailers won't be thrown off.

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