Wednesday, April 7, 2010

The rocket science of soup

One of my consulting colleagues, Dave Holloman has written a fascinating post on his group blog:  The Global Rail.  He uses the wild proliferation of Campbell Soup SKUs to illustrate the dilemma that branded suppliers face.  As innovation slows down and categories are commodified, those players with the power to control what goes on the shelf - retailers in CPG, integrators in tech, are motivated to shift to lower cost commodity or "white label" solutions.  These 'store brands' take shelf space that was previously owned by branded competitors.  The branded competitors respond by adding more and more options to differentiate themselves from the plain vanilla distributor's offer and justify their price premium.  David points out that this rush to complexity has real costs, both in the delivery/supply chain as well as for the buyer who must invest more time and energy in differentiating between all of the competing choices.

And if the competing choices don't really increase customer value, then there is a net loss to the system.

As they say:  read the whole thing.

 Fighting commodification with valueless complexity, another way to sink your rowboat out on the Openwater.

No comments:

Post a Comment