Consumers and brand power

In the consumer-packaged goods (CPG) sector, consumers are the end decision makers on brands and brand power. Their purchasing patterns, opinions and personal tastes ultimately decide the dynamics of the market and help to drive supplier-retail agreements. 

This article explores the consumer view of brand power, what influences their decisions and how these dynamics affect price and negotiations for the retailers and suppliers. This knowledge and implementation of advisement are a core part of The Gap Partnership’s consulting and training services.

Building brand power

Consumer views of quality, reliability, trust and value define brand power. They are attracted to brands that support their values and deliver on their promises.

• Quality and reliability: Consumers connect strong brands to quality and dependability. Maintaining brand strength depends critically on trust and loyalty developed by companies who regularly meet or surpass expectations.
• Emotional connection: Effective brands establish an emotional relationship with their target market. Strong brand storylines, interesting marketing campaigns and brand-positive experiences help to establish this link most of the times. Consumers that have a strong emotional attachment to a brand are more likely to spend extra on its goods.
• Badge value: Purchasing their favorite brands can be a way for consumers to express themselves. Carrying a Starbucks cup can be seen as a symbol of personal identity that people will pay for, even at higher price point.

Factors affecting buying choices

Pricing, brand loyalty and perceived value are among the several elements that affect consumers' purchase choices. Suppliers and retailers who want to take advantage of the power of their brands must first understand these points

• Price sensitivity: Striking the right mix between premium pricing and the need to give their customers value is a constant balancing act for suppliers and retailers. Discounts, value-added services and promotions help to lower price sensitivity.
• Brand loyalty: Building and maintaining brand loyalty requires consistent quality, positive consumer experiences and effective communication of the brand's values and benefits. Consumers that are brand loyal are less likely to switch products, even if less expensive substitutes are offered.
• Value proposition: Consumers assess quality, price and emotional connection when determining the value of a product. Brands that effectively communicate their unique value proposition can command higher prices and foster strong consumer loyalty.

Negotiation dynamics

Although consumers may not participate directly in supplier and retailer agreements, their purchase choices greatly affect these dynamics. Strong brands influence the terms of negotiation and help to define market strategy.

• Driving traffic: Consumers' preference for strong brands generates demand that shapes suppliers' and retailers' pricing, product selection and promotions. This demand allows suppliers to secure premium prices and favorable terms in negotiations with retailers.
• Shaping market trends: Changing tastes and behavior of consumers help to define market trends and affect negotiation dynamics. Retailers and suppliers must stay tuned to these trends if they want to be relevant and competitive. This calls for ongoing consumer insight analysis and strategic adaptation.
• Feedback: Consumers are constantly offering feedback through their purchasing choices, reviews and impressions. Retailers and suppliers utilize this information to design their products, marketing plans and overall value proposition. This feedback loop allows brands to stay ahead of consumer expectations.

Case study: Kleenex

Supported by Kimberly-Clark, Kleenex is the leader in the tissue space. With a powerful brand identity and connection to consumers, Kleenex has become synonymous with tissues. The following points highlight the key factors behind Kleenex’s market dominance.

• Price inelasticity: Kleenex's strong brand reputation for dependability, softness and quality attracts loyal consumers. This loyalty allows the brand to maintain its market position and justify premium pricing through superior product features like softness, durability and absorbency.
• Brand loyalty: Kleenex has built close emotional ties with its customers by being a household name linked with comfort and personal care. Nowadays, the brand is so ubiquitous in the tissue industry that "Kleenex" is occasionally used as a generic word for tissues, therefore underlining its market dominance.
• Quality and reliability: Kleenex gains consumer confidence through a focus on delivering softness and dependability. This emphasis on quality guarantees repeat business and supports its status as the most often used tissue brand.

Key takeaways

• Build category leadership: Position your brand as a leader in its category, as Kleenex has with tissues, to influence consumer perception and command premium pricing. This level of brand equity not only drives loyalty but also protects your product from price wars and market volatility.
• Create a feedback loop: Leverage consumer feedback from reviews, loyalty programs and market trends to shape innovation and marketing strategies. By understanding your consumer and adjusting strategies to complement their desires, you create a lasting emotional bond that ensures repeat purchases even in competitive landscapes.
• Ensure consistency: Continuously deliver on product quality and brand promises to reinforce trust and build loyalty. Consistency not only secures repeat purchases but also strengthens your negotiating position by maintaining a loyal customer base.

Conclusion

Consumers are fundamental in the dynamics of brand power and pricing. Their opinions, tastes and buying habits shape the market. Brands that position themselves as category leaders use consumer insights to deepen emotional connections and deliver consistent quality can thrive in a competitive marketplace. Aligning negotiation strategies with these consumer-driven dynamics enables suppliers and retailers to unlock new opportunities for value creation and sustained growth.

All three players—suppliers, retailers and consumers—influence the power of brands and the price they command. By viewing these dynamics through the lens of negotiation, we uncover the strategies that drive success and create lasting brand value in the CPG sector.

Want to dive deeper into the realm of brand power?

As we continue to explore the dynamics of brand power and pricing, the next article will focus on the consumer perspective. Although they do not directly have a seat, understanding how consumers impact the negotiating table is paramount to finding success.

More reading and listening

Tariff-proof strategies: Elevating CPG negotiations article by James Kennerdale, Regional Commercial Lead, The Gap Partnership and Mike Kamins, Partner, The Gap Partnership

Chris Prahler | Inside my head podcast hosted by Michael Perlish, Principal, The Gap Partnership, featuring Chris Prahler, Vice President Global procurement & CPO, a seasoned professional with a 25-year journey spanning from Target to Chewy and Lowe’s

Buying alliances: Coming to a market near you article by Chris Atkins, Partner, The Gap Partnership

Inflation: It’s all in the words article by Scott Chepow, Partner, The Gap Partnership

For more, visit www.thegappartnership.com/insights

About the authors

Nick Capuano is a Manager at The Gap Partnership, with over a decade of expertise in business development, account management and strategic leadership. As National Business Development Manager and National Account Sales Manager at PepsiCo, Nick spearheaded new business initiatives and secured high-impact deals with industry giants like Papa John's and Dairy Queen. Nick consistently delivers exceptional results and fosters a culture of excellence, driving transformative growth for his clients.

Chris Potestio, Senior Consultant at The Gap Partnership, has over 20 years of experience in Corporate Grocery, Wine & Spirits and Consulting. He previously managed $1B+ in sales at Southeastern Grocers, expanded global suppliers at Stew Leonard and oversaw an EBITDA growth of between $1M and $100M across other projects. Chris has received industry recognition, including the HEB Merchant of the Year and a Retail Innovator awards for his strategic and operational contributions. 

About The Gap Partnership

The Gap Partnership is a management consultancy specializing in negotiation. We help organizations drive profitability, increase efficiency and reduce cost. 

We provide development programs and negotiation training to our clients. We work with you to understand your challenges and performance needs. Our negotiation consultants come from your industry and will support you with a 'complete' solution that embeds learning, measures capability and delivers sustainable change.We hold ourselves accountable for your success. 70% of our business comes from clients we have worked with for over five years. 

If you require further information on how we can help you and your teams make the most of every negotiation, or simply need to ask us a question - just call, email or complete the form.