eBrands is a consumer goods brand house that aims to acquire and elevate innovative, Nordic eCommerce brands to the levels that they are capable of. We analyze thousands of brands each year and day-in-day-out we see brands that have the potential to become household names if they are given the right support. Now, what support actually means, differs for each brand (because each brand has its own unique strengths and weaknesses) and consequently a key part of our process at eBrands is identifying what the right strategy is for a brand to maximise its opportunity for growth both now and over the long-term.
For this reason, our Head of Brand Studio, Patrik Ignatius, sat down with our CEO, Robin Bade, to chat about 2 crucial parts of every brand’s growth strategy - market positioning and sales expansion options.
Patrik: When we look at growth strategies for brands, one of the first things that we always do is look at how we can amplify the unique identity and properties of the brand to maximise its value to customers. After we’ve established this we look at how we can best position the brand within its market based on its value proposition to customers.
We often talk about the range that each brand falls into when we look at these value propositions, such as luxury, premium, value and cheap - how would you explain each of these categories?
Robin: So I see this as a sort of pyramid that starts with high-end ‘luxury brands’ (Armani for example), that are focused on high quality, exclusivity, well above market prices, brand experience and a small customer base. It then progresses through to ‘premium brands’ such as Patagonia, that are high quality and still expensive, but with products in the range of a few hundred Euros and lower, rather than thousands. Then you have ‘value brands’, which sell quality products at a mid or low price point, where the price and value equation is in order (they are good value for money) and finally ‘cheap brands’ that sell high volume, low-quality products at a low price point.
From eBrands' perspective, we’re an eCommerce-first brand house so we generally don’t take too much of an interest in luxury products as they have a higher reliance on creating their own physical stores, and we’re not interested in cheap brands as they don’t align with our goals of selling long-lasting durable products that provide value to the customer.
These categories are important, because understanding how this structure works means that you’re better placed to fit the growth options to the brand instead of trying to fit the brand to the growth options.
Patrik: A key part of this pyramid is that the perception of brands faces more resistance going upwards than it does downwards, because customers are more willing to buy less premium products from a premium brand, than they are willing to pay for premium products (at premium prices) from a less premium brand.
Robin: Exactly, and a good example here might be to ask whether you’d be more willing to buy a €100K car with the same specifications from BMW or Skoda? Even at the same price point with the same specifications, a brand’s perception can have a real and tangible effect on customer choices. Once you’re in the value brand game, you are dedicated to fighting on price, whereas premium brands have the opportunity to put more self confidence in their prices and avoid a race to the bottom. This difference is crucial and feeds into multiple areas, including the sales channel choices you make, your marketing budgets, the regions you choose to expand into and the partnerships you take on with other businesses.
Patrik: As a company, one of our core areas for growth is to buy innovative, Nordic eCommerce brands that often have a premium brand identity. What do you think are some of the better options for developing these brands to take advantage of the brand pyramid framework?
Robin: Well if we’re only looking at the brand from this pyramid framework, and obviously there is a whole package of other areas that we apply our expertise to (such as supply chain, financing, analytics, and much more) what we always aim to do first is to further develop the core businesses of the brand. So if the core businesses of the brand are wholesale and D2C, then we first focus on looking at what we can do to strengthen distributor relationships, improve product offerings, upgrade the website's look and fine-tune operations, plus other areas… and then once we know the core businesses are strong and positioned for growth, and that there is a healthy, controlled price point in the key markets, we look at expansion options.
Now this might mean looking at marketplaces, but if you want to control your price point, you need to make sure those marketplaces aren’t going to interfere with that control, so you might look at geographical regions where your B2B buyers aren’t located or at offering non-core product lines on marketplaces such as Amazon or Walmart to increase your product offerings and brand exposure, without creating price competition for your core offerings. Our goal is to take our omni-channel skills and brand development knowledge and create a plan for the brand that allows it to meet the right customers in the right part of their customer journey.
Patrik: So would it be fair to say that the stronger a brand’s equity is with its consumers, the more you can leverage those sales channels that aren’t in line with your brand perception?
Robin: Well, yes and no. Every successful brand has developed its own place in the market and the product offering it has, dictates where it can compete and where it can provide value to the customers.
If you’re a coffee drinker and you want an espresso machine, and especially if you’re looking for a more expensive model, D2C or retail become more powerful tools because being able to provide the brand experience and meeting the customer on social media or via search allow you to communicate the value of the brand more powerfully. Similarly, if people are on search or social media, even if they are not directly looking for a coffee maker, being able to have that brand experience touchpoint with them increases the chance of them becoming a customer later.
In contrast, most online marketplaces are built to allow hyper-competitiveness among products, and in this space you are more likely to meet a customer that has a specific product or need already in mind. Here, for example, you would be better off selling the refills for the expresso machine, because price is always likely to dominate and placing a premium brand’s, core products here may lead to increased price competition for your brand, margin erosion, lower control of your price variance (a bad sign for potential B2B, especially larger retailers) and potential harm to your brand reputation. This isn’t always the case and premium brands can and have done well on Amazon, but it is a risk that you need to consider for the brand and then make a decision as to whether or not it is the right fit.
This is why as a brand house, having an omni-channel mentality is so important to us, because we know every brand’s growth plan is different, and having a customisable skill set gives us the flexibility to create strategies that understand each brand's needs so that we can maximise their potential.