Building brands trumps trend toward commoditization
John Kalkowski, Editorial Director -- Converting Magazine, 7/1/2007
The way converters view their raw materials highly depends on their role in the business. Purchasing agents, for instance, frequently think all materials are mere commodities. Films, foils, paper, inks, plates, whatever. Materials are interchangeable, and their price is subject only to market whims.
OK. It is the buyer's job to ensure the manufacturer has the right stock when it's needed and at the best possible price. Down on the production line, though, they know better. They realize that they have no chance of meeting their goals if the materials are substandard. Total cost of production can't be measured in materials and labor costs alone. When due yesterday, they don't want to load a new batch shipped in from “only God knows where.”
Press operators recognize they need to rely on the inks to produce vibrant print that doesn't migrate through the package barrier. Still, they don't want to be running back and forth to adjust the pH to keep the color consistent. So once they've found an ink that runs, good luck trying to get them to change.
If the materials were truly commodities, you could run supplies from different vendors back-to-back. No adjustments. No problems. Yeah, right.
The manufacturer knows the product is not a commodity, too, because he's built in a variety of application-specific characteristics that might not even run on another converter's machine down the road.
The fact is that many manufacturers of packaging raw materials have let their products become commoditized. They've churned it out in massive quantities. They've reformulated to the cheapest and most-available materials. Other companies have leaped onto the opportunity to sell their capacity into a supply stream that could match the Mississippi River. But they've sold themselves down the river because then they can only compete on price.
Many say that quality is a given just to compete in today's market. Not true. Real quality is measured by products that offer minimal variation. Yet you know that not all packaging materials offer that quality.
It's difficult to brand a commodity product because it offers no points of differentiation. How-ever, converting suppliers must be able to build a brand that stands out in the market. Scott Bedbury, a marketing and brand consultant, once said: “Brands are not simply products or services. Brands are the sum total of all the images that people have in their heads about a particular company or product.”
A brand should create the perception that your product represents quality and value that is unavailable from competitors. Even if customers are lured by that siren song of lower prices, it is the quality, service, availability, dependability and the innovation that build a customer's loyalty to a brand. For materials suppliers, a brand commands a premium because the products offer added value and are not a commodity.
Are you building your brand today?
Editor's Note: This month, Editorial Director John Kalkowski launches a new column addressing the challenges, trends and issues facing materials suppliers to the converting industry.
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