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3. The Price Value Relationship
In recent years beverages like POM Wonderful have done an outstanding job upping the ante on consumer involvement in beverages. And as people are paying $3.99 for one single-serve beverage, their category involvement has necessarily risen. So perhaps products like POM have the potential to be more
successful with branded ingredient partnerships due to the already
higher levels of consumer involvement in the purchase process. But
before rushing out to add a branded ingredient to your already pricey
beverage, consider one last thing – does the consumer want the added
ingredient, and are they willing to pay more for it. I’m fairly certain
that if the floating globs in Orbitz had been DeBeers diamonds that it
wouldn’t have changed the ultimate fate of the brand. Let’s face it,
these so-called branded ingredients don’t come cheap, so if you are
planning to pass the bill on to the consumer, the price to value
relationship needs to be in line.
So
are these obstacles insurmountable? Theoretically, they aren’t. I can
imagine a scenario where a branded ingredient story could be quite
compelling: In the sea of enhanced waters on the market, imagine an
energy water with a logo emblazoned on the front that says “Powerpack
by Red Bull.” Red Bull has outstanding awareness, and is specifically
well known for being a credible source of real energy. Importantly Red
Bull already commands a market premium. I think this type of ingredient
story would enable a manufacturer to not only charge a premium, but in
fact drive the sales of any energy brand in the sea of seemingly
lookalike competitors. And while I think it’s a good example of what
could work, I won’t go rushing to claim the idea in intellectual
property court, because I can’t see Red Bull entertaining the
desecration of their sacred bull anytime soon.
So
for me this idea has been “trash” to date. However, if a SUPER PREMIUM
beverage were to form an alliance with a well-known, credible
ingredient partner that provides a relevant benefit that people are
willing to pay more for, it could create sustainable competitive
advantage.
However, it begins to sound like the insurance policy that Porky Pig bought from Daffy Duck – too many caveats for me – keep it in the trash.