Stephen G. Barone

barodine marketing communications/research/design

Social psychologists have known for a long time that once a person makes a choice based on rational elements, he or she will quickly develop less-rational, emotive reasons for staying with it.

Thus, during the last century, a young man who carefully chose between a Ford and a Chevy pickup truck by comparing price, features, and benefits would afterwards devolve into an exclusive “Ford man” or “Chevy man” for the rest of his life.

Once such a transformation from “value shopper” to “brand devotee” occurs, it’s difficult if not impossible to dissuade a buyer with rational, value-laden appeals about price, features, and benefits. However, Earth hath no fury like a brand devotee spurned. If he begins to feel betrayed by “his” brand, he will abandon and badmouth it vigorously.

This creates particular peril for manufacturers of professional products that are considering brand extension into the consumer market.

For example, if Snap on® tools were to become ubiquitously available at consumer retail outlets, a good deal of the company’s brand equity would be put to risk, because the perceived exclusivity and the “professional” cachet would be diminished. 

As well, the quality and features that are necessary for a professional line of tools can be overkill for the consumer market. A heavy-duty tool being marketed to the light-duty homeowner is going to be at a cost disadvantage against the likes of Black & Decker or Skill®. Thus, the temptation is overwhelming to produce a less-engineered tool for the consumer market and brand it with the professional tool’s name.

Even more dangerous is when a company denigrates its entire product line so that it can ostensibly compete in the consumer and professional markets simultaneously. The strategy, of course, is to remove just enough value so that the professional product is price-competitive in the consumer market, but not so much as to alienate the professional base of customers.  Here, the results can truly be negative. Professionals might abandon the tools once the lower quality is perceived, and the brand might nonetheless remain too expensive to compete effectively in the consumer market.

One way around these perils can be sub-branding.

For the do-it-yourself electrician, Square D® has developed a lower-cost alternative to its core brand, called Homeline®, which is shadow branded with the Square D logo. Cleverly, higher-priced Square D circuit breakers will fit into a lower-priced Homeline panel box, allowing you to upgrade it. The converse is not true. You cannot denigrate a higher-priced Square D distribution panel with a lower-priced Homeline circuit breaker.

Still, Square D is walking a thin line here. Part of the respect for many licensed tradesmen is what “professional brands” they can provide customers that are “exclusively available” through them. And they often make pariahs out of brands that betray this exclusivity. In effect, gains in consumer market-share might come at the expense of the professional one; and a company has to decide in which it can primarily compete. 

A Note About Price Positioning

The emergence of a new product into a market always results in a shifting of relative price points. Thus, upon entering the consumer market, being the costliest, a denigrated professional line might inadvertently reposition a competitor’s consumer line into a more advantageous market position.

For example, imagine that there were two extant consumer tool lines on the retail shelf. Brand X is the cheapest and Brand Y the more expensive. Brand Z enters the picture, a denigrated professional line that is more expensive than both Brand X and Brand Y. This changes the mix so that Brand Y is now the middle-priced offering.

Most shoppers gravitate to a middle brand, feeling it is the best compromise between price and quality. Thereby, an ill considered entry into the consumer arena not only loses brand equity and market share in the professional sphere for Brand Z, the strategy inadvertently transforms Brand Y into the category goliath by drawing off sales from Brand X.

Subsequent responses by Brand Z can lead to disaster. The reflexive instinct is to lower prices as a way to compete with Brand Y. Even in the best of situations, competing on price is ill advised, because it attracts price sensitive customers who do not develop brand loyalties. But it can be virtual suicide for a product that has entered the market already pressed for price, and where the operational structure of the overall enterprise is not designed to reduce cost at every level: materials, manufacturing, inventory, and distribution.

In such a scenario, Brand Z can find itself selling at a loss while simultaneously pressing Brand Y into more and better production & distribution efficiencies, allowing the latter to further increase its market share with lower prices that bleed off increasing numbers of price sensitive customers from Brand X.

 Stephen G. Barone is a marketing communications consultant and co-principal at barodine marketing communications/research/design, a general contractor of creative and analytical marketing talent to the science, technology, engineering, medical, professional, and general business communities.

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