Shattering the premium price illusion

22 November 2012
headshot photograph of Matthew Smith, head or procurement, Office Depot UK and Ireland with pink backgroundWhile own-brand products have become more commonplace for procurement professionals, many businesses are tasked with changing the perceptions that come with offering products at a lower price point. Own-brand products have become popular, with businesses focused on tighter control of spend, while at ground level, customers are exploring opportunities to make their budgets work harder, driving good quality and best price to give them better value for money. But there is still a perception that own-brand equals lower quality. In reality, these are often the same or similar to that of their branded counterparts – just cheaper in price. The belief premium prices equal market-leading products is difficult to break, but one many suppliers are trying to work against. Supermarkets, for example, use marketing campaigns to persuade customers of the quality of own-brand products by positioning them alongside better-known counterparts. Although customers are clearly at the helm when it comes to their own purchasing decisions, suppliers need to make sure clients are properly informed by emphasising those products and services that truly add value, as a result of being competitive in both price and quality. After all, the basis of a supplier/customer relationship should be a combination of responding to customer demand while helping to reduce costs. So how do suppliers ensure quality remains the basis of their selection of own-brand products? Well, it’s a consultative process. Many look at the approach taken within their own supply chain and consolidate the number of suppliers and purchases in order to better guarantee obtaining products of higher quality, with better product innovation, features, and improved packaging. Furthermore, procurement teams have a role to play in changing customer perceptions and a supplier’s sales and marketing team needs to appreciate that, as ambassadors of an organisation, it’s critical to understand the challenges faced by customers and find engaging ways to position and promote own-branded alternatives. Regular and targeted communication about the benefits of own-branded offerings is at the heart of this, but unless these efforts are shaped in ways that respond to the need for customers to generate better value within key areas, the message will become diluted. ☛ Matthew Smith is head of procurement at Office Depot UK & Ireland
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