Suppliers and brand power

Suppliers are the designers of brand strength in the consumer-packed goods (CPG) sector. By strategically incubating strong brands, suppliers wield significant leverage in their retail negotiations. 

This article looks at how suppliers use brand power to demand premium pricing and negotiate favorable terms, therefore influencing not just consumer impressions but also market dynamics. 

This knowledge and implementation of advisement are a core part of The Gap Partnership’s consulting and training services.

Building brand power

Establishing a successful brand calls for consistent quality, targeted marketing and a thorough understanding of consumer taste. Suppliers make significant investments into research and development to guarantee their products exceed consumer expectations and stand out among competitors.

• Consistent quality: Delivering high-quality products consistently is a key aspect of brand building. Consistency builds trust and loyalty, which brand strength depends on. Every product bearing the brand must meet or exceed their consumers’ expectations.
• Strategic marketing: Suppliers use a combination of traditional and digital advertising, like celebrity endorsements and viral campaigns, to build brand awareness and loyalty. Compelling storytelling engages consumers and creates an emotional connection to those products in their minds.
• Consumer insights: By investing in data analytics and market research, suppliers can gain insight into what drives consumer choice. Fact-based decision making in new product development and marketing strategies is critical.

Negotiation dynamics

Retailers are eager to offer products that generate foot traffic and increase sales. As a result, suppliers can take advantage of the demand their brands create to negotiate better terms. Carrying strong brands can improve a retailer's offerings as well as drive revenue and customer loyalty.

• Pricing: The value that strong brands provide allows them to ask for higher prices. Using this as leverage, suppliers negotiate premium price points that their products demand.
• Exclusivity: Exclusive agreements both defensively keep rivals out of the market and provide broad exposure. Deals can call for special distribution rights, promotions and prominent display space.
• Co-branding: Partnering with other brands can include collaborations, exclusive product launches or co-branded promotions. These combined marketing efforts amplify reach and drive mutual growth.
• Innovation: Suppliers must constantly innovate if they are to remain competitive in the market. Growing consumer trends, like sustainability and wellness, call for agility in marketing plans and product offerings to stay relevant.

Case study: Tide

Well-known company Proctor & Gamble has created many household products, one of which is Tide, a brand famous for its innovative laundry solutions. Through consistent product quality, effective marketing and a deep understanding of consumer needs, Tide has become a premium brand in the home cleaning industry.

• Pricing: Given its excellent reputation, Tide is the first choice for many consumers. They’ll pay more for the perceived added value it provides even if cheaper options are readily available.
• Exclusivity: Exclusive partnerships with retailers let Tide secure prominent display space and keep their competitors at bay. This raises brand awareness and drives consumers to pick Tide.
• Co-branding: Tide can increase its consumer reach by partnering with eco organizations, sports teams and influencers. These collabs emphasize its image as a trusted laundry brand while playing on consumer values like sustainability or fandom.
• Innovation: Product differentiation supports Tide’s core business while driving trial with new consumers. Tide Pods, Tide Free & Gentle and Tide Plus Febreze are examples of innovation that caters to a wide spectrum of consumer needs.

Key takeaways

• Invest in innovation: Continuously innovate to differentiate your offerings and expand your customer base, as seen with Tide Pods and other product extensions that cater to specific consumer needs.
• Establish exclusive agreements: Use exclusivity to secure shelf space and reduce competition, increasing your brand’s market visibility. These agreements can also be valuable for the retailer if they are the exclusive carrier.
• Build valuable partnerships: Collaborate with trusted organizations or influencers to amplify your brand’s appeal and recognize the impact of consumer belief systems on decision making.

Conclusion

Suppliers that understand the marketplace and adapt their brands to consumer taste will succeed. Concentrating on quality, targeted marketing, and consumer insights allow suppliers to create strong brands that command premium pricing, enable them to negotiate better terms and build valuable partnerships.

Conversely, by using the brand power of their suppliers, retailers can draw shoppers and increase sales. Retailers may also help develop new brands by giving them more visibility, therefore increasing market share and awareness. 

Want to dive deeper into the realm of brand power?

In the next article, we’ll explore the retailer’s perspective at the negotiating table. 

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.