Monday, July 12, 2010

Premium brands

I have recently been on a few excursions, I hiked the San Rafael Swell in East central Utah, Lake Powell, Zion National Park (Orderville Canyon), and Ibapah Peak in the Deep Creek Range near the Utah-Nevada border. One thing that stood out to me was all of the brands that I came across and how much money people paid for the "premium" brands. One brand that I saw while I was backpacking in the Deep Creeks was Outdoor Research. This is a brand that commands a premium for all of its equipment. I will admit that it is some good stuff but I started thinking about the business model. This company has only a finite amount of people that are going to buy their product, the higher the price the less customers... that's pure economics. They've obviously found the maximum pricing but in order to support that pricing there has to be something to it. The brand. With many outdoor products its all about word of mouth, that's how OR became popular with the REI group. REI works on a pull and push method... meaning if you have a great product you can push it into stores... or if there is a demand for a product then REI puts it in its stores. (Think Icebreakers, see previous post on that). In order to appeal to the granola or liberal outdoors people the brand has to keep a sense of a minimal footprint. This is tough to do and be really successful but some brands do it. OR has been around for a while and it has taken its time building its brand. I wish I could say more about it but that's just it, there really isn't much to it. The logo is bland, but the product is good... hence, a successful product. Makes me wonder how much better they could do with a strong marketing and branding campaign.

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