We hear all the time that elements of traditional molecular biology reagent portfolios have become increasingly commoditized. Dictionary.com defines commodity as “any bulk good traded in an exchange…”. By that people generally mean that the reagent is not differentiated by anything other than price. One bag of tips or tubes is the same as the next so why pay premium prices? It is an argument that is not without its merits. There probably are some research products that really are not differentiated. However, I argue that they are few and far between and the exception and not the rule. Let’s take the aforementioned tips and tubes example – have you ever used a lower cost tip that did not make a good seal on the Rainin multi-channel pippet? The volumes drawn are not consistent for all of the tips and it is visible evidence that is hard to ignore. What about a micrrocentrifuge tube that pops its lid in a hot water bath? Has that ever happened to you? If it has I will bet you it was not from Eppendorf. A commodity is not something that performs differently each time you use it.
Lets consider Taqpolymerase, a reagent that is used every day in hundreds of thousands of labs around the world. It is notorious for being described as a commodity reagent. Why pay more if Taq is Taq? Sometimes that may be true. If you only need 80% success in screening thousands of samples for presence or absence of a sequence then I would agree. But if you need it to be a robust and reliable reagent for important experimental determinations then we all know one commercial Taq is not the same as the next. So how do we know? Branding.
Scientists often turn up their noses to issues of brand but such as response is ingenuine. Of corse brand matters. Evidence abounds! The Taq polymerase patents began to expire 5 years ago and anyone can make and sell Taq. But what company still sells more than anyone in all its various configurations and blends? Life Technologies through its Applied Biosystems and Invitrogen brands (NASDAQ: LIFE).
Greg Lucier, Chairman and CEO of Life Technologies undertands the value of brand. In a recent quarterly investors call on July 29th 2010, investment analyst Jonathan Groberg of Macquarie Research asked Lucier the following question:
“You’ve often talked about one of the strengths of the portfolio is that it’s not that price-sensitive, and in terms of when you tried lowering prices, it hasn’t really stimulated a lot of demand and that’s why you get … a lot of good pricing ability. Then I’m just curious, specifically within the PCR portfolio, have you tried that overtime? I’m just curious, there’s been … a lot of announcements around people trying to get more into that business. I’m curious just your view of how effective price is as a mechanism in the PCR space.”
Greg Lucier’s response was all about brand when he replied:
“I think what gets highlighted in that particular space, is there’s a lot of the very low end reagents and otherwise. And actually, they’ve always been around, at least for the last several years, kind of the low end of that segment. We have products from that segment as well. So my comments really still pertain globally to this business, that the relationship between price and volume is not a direct connection …. And when you have market leadership like we certainly do in the PCR business, people are inclined to stay with their products, and so we benefited from that.”
That is a practical example of the value of branding in the scientific reagents space. Brand reputation is important to scientists whether they admit it or not.
Need help with branding? Percepta can help you with a brand platform that will build equity for your reagent brands. As always your comments are welcome (no blogspam please).