The Value of Brands
While aligning the assets of two companies we recently acquired, we have begun to assess the value of their brands. Brands are a key competitive asset; perhaps even the ultimate asset in helping withstand the threat of low-cost imitators of our products. Now I need to determine whether to license more brands or try to compete with non-brands and private labels. This has forced me to rethink our strategy of using and licensing brands.
Back when I led Gemini Industries, we used name brands to help differentiate an otherwise simple commodity from our competitors. Additionally, our largest customers were those that valued brands as a way to improve quality and value of their products. Gemini offered our retail partners multiple brand options that helped them differentiate their offerings and become more competitive. This strategy worked for more than 10 years, but it was eventually challenged by the rise of retailer sourcing organizations.
The rise of retailer sourcing organizations over the last six years resulted in a major movement by retailers toward using their own brands and abandoning name brands. This was fueled by a belief that brands really don’t matter and they could gain gross margin dollars by importing their own products and using their own brands. Over the years, some retailers have developed strategies to market and sell major brands and their own, getting the best of both worlds.