Daily Archives: October 2, 2009

The branding of commodities; adding value through differentiation

Sebastian Derwisch sent me a link to a very intelligent and provocative paper by Sumit Gupta on Branding Commodities.

The paper can be downloaded at this brandchannel.com page and then look for the paper by title*, “Branding of Commodities by Sumit Gupta”.

*(the link directly to the pdf breaks but via their web page I can view in Google docs and download it?  Not sure why that is… — Kay)

Small holder farmers around the world are engaged in producing commodities such as tea, coffee and cocoa.  The challenge for Northern marketers is to differentiate their products from those of the competition, and we have seen a wide range of strategies designed to add value.  The market for chocolate is particularly interesting because the premium sectors in both the US and Europe are gaining share from the low end products.  Thus Cadbury in the UK purchased Fair Trade brand Green and Black, and in the USA Hershey purchased premium brand Scharffenberger.

Gupta probes the challenges involved in branding commodities, and discusses product differentiation strategies in depth.

In his conclusion, he observes that:

“Branding of commodities offers additional value both to the consumers and the producers. Branding leads to commodity differentiation and hence enables consumer preference. This translates into greater choice and quality for the consumers. To the producers branding provides the opportunity to increase gross margins by increasing the value perception of their product.”

Post written by Peter Bloch, consultant to CAS-IP