“A rose by any other name would smell as sweet.” These are Juliet’s words in a soliloquy about Romeo. She loves him but his family name Montague (no relation to this author) makes him anathema to her family. If only he had a different name! The line is used often in the business world and needs myth buster treatment.
Several meanings of the line relate to business. One stream of thought concerns the value of the name itself, or branding as it is now widely called. Is a generic product equal to a name brand? For example, is generic aspirin as good as Bayer? Are no name laundry detergents equal to Tide?
Looking at the branding issue opens several lines of inquiry. One approach concerns the product itself – its content, potency and value. Invariably, people say Tide is the best detergent. Its critics say that is only the result of decades of advertising. Well, let’s see. Recently, Good Housekeeping tested 74 laundry detergent formulas — 49 liquids, 19 powders, and 6 single-use tabs — to see how well they removed 20 common stains (oil, coffee, mascara...) from polyester and cotton. Their finding: Ultra Tide Plus Bleach and Ultra Tide powder topped the list. A very close second: Gain Dazzle & Shine With Bleach Alternative. Tide topped the list in both powder and liquid. Consumer Reports (August 26, 2012) also found Tide to be top of the laundry pile (pardon the pun).
This does not stop critics from taking shots at Tide. Many say it is too expensive. The detergent behemoth generates many competing brands. In the same Consumer Reports piece, they found that various detergents were “only slightly better than plain water” including a product with the Martha Stewart name, Clean 2X. Some compete on the basis of price but are unable to match Tide’s quality.
Among the most annoying and ubiquitous product knockoff categories is Vodka. The number of slick ads for new Vodka brands stupefies the observer. Then they – the ads and the brands – seem to disappear. Somehow, entrepreneurs see think Vodka as a simple product, easy to make, and easy to match Smirnoff, the leader, and to grab its lucrative market share. While Smirnoff and Absolut dominate US sales, a massive expansion of brands and flavors has created a fragmented market according to Food & Beverage. Svedka and Pinnacle are relatively new and moving rapidly. However, Smirnoff is anchored to its leadership post or “sticking post” to borrow a Shakespeare term. And, really, flavored vodka. (They should be ashamed of themselves!)
Does branding rely on the name itself? Some products rest on a powerful name such as Martha Stewart. Others, like Tide, built up a name over decades. While Martha Stewart remains an icon, she does not appear to be a long-time manufacturer of detergent. Procter and Gamble (PG) is. Note also that Tide is not one product. There are as many versions of Tide as there are types of stains, which reveals a deep commitment to its customers by P&G.
A second line of inquiry concerns the value and quality instilled by the product name. For the brand to retain true value, there should be evidence that the company stands behind its products. Johnson & Johnson (JNJ) stood by the Tylenol name and its market share rose.
A separate approach to the myth takes the view that the actual products – Armani suits, Gucci bags, Lexus cars – are only one form of what a consumer wants. In this view, luxury can be achieved by a knock off. Look alikes, similar names, etc. deliver almost the same quality at lower price. Note the difference between this approach and Tide’s competitors. “Another” detergent features lower price without any mimicking of the industry leader. Also note that this is the opposite of Shakespeare’s line. Following this logic, Juliet would be on a portico in Verona asking if there were another good looking lad – just as good looking as Romeo – but without the Montague name.
Product knock offs generate a good number of laughs. How about Battman or Doubiemlnt Chewing Gum or Guggi bags? (These are shown on thechive.com. the website. newmaconline.com shows the iPod nano, one of many products seeking to capitalize on Apple’s popularity and market share. Maybe imitation is not the sincerest form of flattery.
A knockoff is one thing but outright theft makes one’s blood boil. Many companies have found their technology vulnerable to imitators, many of whom operate far from the long arm of the law. The market is waiting to see the final outcome between Apple and Samsung. Even though Apple is victorious at this point, it may not be able to protect its technology completely.
So, considering what Juliet said – and remember, these are her words not Shakespeare’s own – a rose by any other name comes close – as close as an athlete on steroids, as close as a $50 imitation Gucci or Rolex, as close as an “Armani” suit for $100 with a free baseball ticket, as close as a New York pizza at a distant beach. Sorry, Juliet, but there is no substitute for the real thing.
Stay tuned – another myth will be “busted” next month. Please comment on this myth and let us know which myths need exposure.
Michael McTague, Ph.D. is Senior Vice President at Able Global Partners, a private equity firm in New York City.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer