By Ron Solomon//August 1, 2023
By: Ron Solomon//August 1, 2023
In today’s expanded retail world, emerging pet brands face numerous challenges in finding distributors, securing shelf-space and competing against established players. The surge in e-commerce has further exacerbated these difficulties, with unstable pricing hindering the development of a consistent brand image and pricing strategy.
However, there are effective approaches that smaller brands can adopt to overcome these hurdles, including setting the right prices, implementing policies and maintaining control over online sellers. These strategies enable emerging brands to rise above the competition and establish their presence in the market.
Determining the actual worth of a product in the current retail landscape has become more complex. Previously, brands could set the price and retailers would sell the product at that amount, effectively conveying margins and brand perception. However, with the advent of e-commerce, the retailer and consumer now play a crucial role in determining the value of a product. Brands often find themselves on the sidelines, watching their product prices fluctuate in near real time, primarily driven by online sellers who prioritize price as the sole competitive tool.
Such inconsistent pricing practices are unacceptable for many brands as they can negatively impact product image, profit margins and retailer demand. To truly understand the value of a brand, stable pricing is essential. Wide price variations make predictability difficult, impeding inventory planning, marketing strategies and wholesale pricing decisions.
To accurately determine the true worth of a product, brands must consider various factors, including consumer demand, competitor pricing, production costs and marketing expenses. Adopting a comprehensive approach to pricing and consistently monitoring the market empowers brands to set prices that reflect the actual value of their products, ensuring a healthy profit margin for all stakeholders.
Equally important for new brands is the development of a winning strategy that establishes rules for selling their products. Minimum Advertised Price (MAP) policies are invaluable tools for emerging brands striving to make their mark. By setting a minimum price, brands can differentiate their products from competitors, making them more appealing to representatives, retailers and consumers.
MAP policies also safeguard smaller brands from engaging in destructive price wars. In the absence of these policies, retailers may resort to aggressive price competition, leading to a detrimental race to the bottom that erodes profit margins and damages brand perception precisely when building it is most crucial. MAP policies provide a protective shield, helping smaller brands uphold their image while safeguarding their profit margins.
Furthermore, MAP policies instill confidence in retailers and distributors to take a chance on smaller brands. Brands that actively manage their distribution and pricing pose less risk for sellers. Stable pricing empowers sellers to determine their product catalogs, order appropriate quantities and decide which products to promote. By employing this strategy, smaller brands can build trust, credibility and reliability, thereby reducing risk and establishing a sustainable revenue stream that ultimately drives growth and profitability.
Another essential aspect for new and smaller brands is to limit the number of online sellers authorized to carry their products. A proliferation of online sellers can lead to inconsistent pricing and branding, which can undermine a product’s image and value. By carefully selecting and managing online sellers, brands can effectively enforce MAP policies and prevent a downward spiral in pricing.
Using wholesale distributors creates another challenge in this area as they sell to customers that the brand doesn’t know. Good relations with the distributors are essential because controlling the number of online sellers also helps mitigate channel conflict, which arises when different retailers or sales channels vie for the same customer base. Channel conflict can be particularly detrimental to small brands that may lack the necessary resources to manage it effectively.
By restricting online sellers and maintaining stable profit margins, small brands can create an exclusive product offering, fostering greater loyalty and support from key stakeholders. This, in turn, leads to increased profitability, growth and a stronger position in the market.
By adhering to these best practices, emerging brands can build trust and credibility with customers and partners, differentiate their products from competitors, and ultimately improve profit margins, brand perception, and market strength. By formulating a comprehensive strategy that incorporates MAP policies, distributor agreements and authorized seller policies, smaller brands can overcome retail hurdles and ascend to the top.
Ronald Solomon, the CEO of MAPP Trap, is a multi-faceted creator with a history of producing published novels, network television shows and award-winning toys and games. Leveraging his experience in defending intellectual property, he founded MAPP Trap, a solution now utilized across diverse industries such as pet, toys, gift, nutrition, beauty, outdoor and sporting goods, to aid companies in protecting their brands from unregulated ecommerce.