This move is easier when you understand that branding is the most powerful concept in consumer sales. Whoever owns the brand and branding process will capture extra profits often unrelated to production costs.
In commodity chains, which have exhausted the cost reduction options, branding offers the possibility of increasing sale value without loss of market share, thus increasing profitability.
Branding is a way for manufacturers or sellers of goods to distinguish their products from like commodities. For many centuries, the concept of branding was limited to the "maker's mark." This mark, applied to everything from knives to brandy, assured the buyer of a consistent quality.
Brands based on technical attributes were always subject to being displaced by competitive products. Brands based on low or moderate prices are always subject to erosion from the cheaper, better and faster competitor.
Lifestyle Branding In the last 50 years, with the advent of mass media and rising per capita incomes, branding has become much more revolutionary. It has shifted from assurances of technical quality or performance to defining the very relationship between product and buyer. This form of branding, referred to as emotional or lifestyle branding, offered something performance-based claims could never do. And the instrument of modern branding - mass media advertising - has greatly reduced the time it takes to establish brand identity, though much more than advertising is needed to successfully develop a brand.
Fresh meat branding can take place around attributes that are both observable and unobservable. Examples of observable attributes include color, size, absence of visible fat, etc. Unobservable attributes include "family farm raised," safety, U.S. produced, corn-fed and so on.
Unobservable attributes require the trust of the consumer and therefore require information systems and/or strict production and processing protocols since, if the trust is violated even once and discovered, the equity in the brand is eroded forever.
Price Differentiation In economic theory, successful branding allows price differentiation. It makes the demand for the branded product more inelastic. This means if you increase the price of successfully branded pork chops by a certain percent, say 5%, it will result in less than a 5% loss in sales to unbranded, commodity chops or other substitute meats. Commodity pork chops are price elastic as beef and poultry prices fall. This means even small percentage increases in price will result in larger declines in quantities purchased as consumers seek cheaper alternatives.
Branding in meat has been almost exclusively reserved for processed products, such as hams, bologna, luncheon meats, bacon, etc. But in the fresh meat case, with the exception of poultry, most fresh meat brands have failed because actual and perceived differences are difficult to demonstrate and maintain.
Perdue brand was one of the first successful fresh meat brands in poultry. A perception of extra quality was established partly because of successful branding of Perdue eggs and partly because of a truly superior quality, uniformity and color of Perdue brand chickens.
Several attempts at branding U.S. pork are underway. Most only promise a leaner and, by implication, healthier product. Others try to capture and transfer successful brand names from the processed case to fresh products.
In Europe, fresh pork branding has been very successful around attributes such as "outdoor-raised" and product traceability. In Great Britain and France some fresh pork cuts have a tracking number on the package that identifies the farm and the animal from which the cuts came. These attributes command a higher price since they provide a certain reassurance.
Branding transforms perfectly competitive markets to monopolistically competitive ones. Prices can exceed the long-term average cost of production. These extra profits are called brand "rents" and if maintained over time, create brand equity.
With the advent of costly fixed asset investment and the savings associated with economies of scale, finding a profitable long-term market for the increased amount of pork is critical.
Successful pork branding will allow prices at the retail level to increase while reducing the normal substitution of beef and poultry when they become relatively cheaper. For this reason, branding is the next frontier as commodity pork markets move into the 21st century. The big question: How to establish an emotional relationship between the buyer and pork? Unlike technical attribute branding, this brand could last a lifetime.