A different strategy for organic
companies is to “join ‘em” by introducing private label products themselves.
The key to this strategy is to build a
company system based on cost leadership and vertical integration. Private
label success is completely dependent
on being the undisputed low-cost producer, as well as having vertically integrated operations so that the private
label provider is in control of its own
processes and resources. Additionally,
systems need to be in place to meet
the retailers’ high private label expectations. The company needs to achieve
99 percent perfect performance in all
areas of quality, service, accuracy and
delivery. Anything less will leave the
company subject to negative review by
the retailer and possible switch-out to a
different vendor.
The final option is to “co-exist with
‘em” meaning that the branded com-
pany manages its share and shelf position to be a valued product alongside the retailer’s private label offering. In this strategy, the goal is not to displace private
label, but to be a valued partner with the retailer in managing the shelf set for optimal performance. This optimization often means creating a set that combines
the retailer’s private label with one or two strong brands, resulting in a diverse
range of products that meet different consumer needs.
10. Communicate with Stakeholder Network. Good communica-
tions by the company’s leaders to its stakeholder network is essential
during times of difficulty. Many stakeholders will be very confused, anx-
ious or ill-informed about the nature of the downturn, its effect on the company
and whether the company is in trouble. In the absence of good, accurate informa-
tion, misinformation and damaging rumors frequently fill the vacuum.
“I see one of my most important jobs is to communicate—with employees,
suppliers, customers, key vendors, bankers and investors,” said Kellison, CEO of
Traditional Medicinals. “It’s important to be honest about current conditions, to
give the facts, not over-sell and keep expectations in line. Even if our company is
doing OK, I can’t assume that my stakeholders know that it’s OK. I need to continually reach out and provide fact-based information regarding the company, its
health and the key priorities and opportunities.”
Communication with employees is also important. “The knee-jerk response in
an economic downturn is to wring greater productivity out of your workforce by
making employees work harder. But this can hurt more than help, by fueling resentment and burnout,” said Stewart Friedman, professor of (continued on page 54)
