The retail landscape is changing today faster than ever. The pandemic has accelerated the already astronomical growth of Marketplace sales. Global supply chain issues have strong potential to continue that trend by presenting brands with late inventory, causing products to miss their season, and potentially be sold at a discount. The continued growth in marketplace sales volume presents a myriad of issues for brands. Number One among them is the price pressure placed on each item, if not addressed, drives down brand equity. If a brand has less brand equity, consumers are more likely to accept an alternative. Adding to this threat, the largest marketplace has more than 70 private label brands, controls advertising on its’ platform and has a best-in-class logistics infrastructure.
It all seems overwhelming to consider how to operate in today’s retail world and set up for the future. The answer is for Brands to control what they can to protect their equity. Defining and calculating brand equity is challenging. Investopedia writes, “Brand equity refers to a value premium that a company generates from a product with a recognizable name when compared to a generic equivalent.” Marketing Professor and Theorist David Aacker defines Brand Equity, “A set of assets or liabilities in the form of brand visibility, brand associations and customer loyalty that add or subtract from the value of a current or potential product or service driven by the brand.” Counter Diversion quantifies Brand Equity as the most units sold at the highest price, across all sales channels. Strong Brand Equity drives premium high margin sales, strengthens distribution strategies, and aids market share capture at higher volume price points. For these reasons, Brand Equity should be protected at all costs.
Three factors to Protect Brand Equity
Define what products the brand will stake its’ reputation, make sure policies and tools are set up to protect them.
Put as much time and energy defining strategies to sell product at the end of its’ lifecycle as is invested when the product is launched. Deep discounts on all products can have a significant negative impact on Brand Equity. This is magnified when those discounts exist on predecessors to products on a Brands’ new MAP (Minimum Advertised Price) list.
Have a seller centric focus on disruptive marketplace listings. Understand how each of these sellers is getting access to the Brands’ products and be prepared to address the gap.
Deckers Brands running Brand, HOKA ONE ONE, is a prime example of how to maximize Brand Equity. This Brand is credited for creating desirable premium products and addressing social and environmental change issues that are important to their consumers. In addition to relentless policy enforcement and legal efforts protecting their products, HOKA ONE ONE partnered with Counter Diversion in addition to their marketplace tracking service, on a seller centric marketplace strategy, to define the source of product associated with disruptive listings. These efforts significantly changed the Brands product values online, removed Grey market listings and continue to drive demand back through the Brands desired sales outlets. The combination of these efforts drove demand back to the Brands desired distribution outlets, strengthening their relationship with retailers and culminating with the 2020 REI Vendor Partner of the year.