End of the Line? Time to Reconsider Umbrella Brand Marketing Approaches
The ability to leverage brand equity via extensions is among the most oft-cited reasons for having a strong brand, and with good reason. Brands that can occupy more flavor or design slots demand more mind space with customers and more shelf space with retailers. This virtuous circle makes it easier to successfully jump categories, driving sales and further enhancing brand equity.
Conventional wisdom says it’s easier to launch a successful line extension than a new stand-alone brand. The recently released 2012 ‘Pacesetters’ report from IRISymphony bears this truism out. All of the top 10 most successful new CPG products were line extensions.
- P.F. Chang’s Home Menu
- Thomas’ Bagel Thins
- Oscar Mayer Selects
- Folgers Gourmet Selections K-Cups
- M&M’S Pretzel
- Sun Drop
- Kellogg’s Special K Cracker Chips
- LEAN CUISINE Market Creations
- Gold Peak Chilled Tea
- BAILEYS Coffee Creamer
The Beginning of the End for Lines?
While line extending is a proven way to build the brand, providing energy and momentum, it is not necessarily the best way to promote specific products within the line. Consumers are becoming more discerning. Our work in categories as diverse as food, fashion and technology suggests consumers approach purchase decisions more as one-offs, instead of relying on brand knowledge to simplify decision-making. They no longer believe brands are able to be best of class across all categories.
Line independent decision-making is particularly true of Millennials, who carefully research even small purchases to ensure they get the best product at the best price. In the past, young adults moving into new life stages were prime targets for molding a lifetime of consumer loyalty. Yet, this approach may not hold up with the current generation, as expectations rise and loyalty erodes. The How America Shops MegaTrends report by WSJ Strategic Retailing group states that 80% of Millennials believed it's important to get the lowest price on most things; 60% are likely to choose a lower-priced brand over their usual go-to brand.
Consider these recent findings from our Millennial-focused client work…
- In fashion, we hear young women say they have favorite brands, but are deliberately avoiding a head to toe look in any one brand.
- In food, we hear consumers who rely on branded convenience foods finding creative ways to mix it up, rather than relying on meal kits.
- In appliances, many consumers no longer aspire to the one-brand kitchen suite, preferring instead to cherry pick the best refrigerator, range and dishwasher from among all the options.
Coincidentally, these customer changes are happening at the same time companies are giving more attention to their corporate CSR efforts, their master brand strategies and their corporate reputations. Even the venerable “House of Brands” stalwart, Procter and Gamble, is making an effort to build equity in the P&G name, with its mom focused -Olympics ads.
Brand Strategies Need to Adapt to Changing Customer Motivations
Line extensions are here to stay and corporate CSR efforts aim to accomplish more than customer loyalty. Nevertheless, shifts in consumer sentiment and behavior regarding the value of a brand name when making decisions are worth consideration. If your brand extends to multiple products or categories, here are some questions you should be asking about your marketing:
1. Where do I need to build equity? At the product attribute level or the brand benefit level?
This is a classic brand architecture question. If consumers make their decision at the product level, it may more sense to talk about product level attributes than brand-level benefits as this is where they are making purchase decisions.
Cleaning products are a good example of the drawbacks of emphasizing one overarching benefit across the line. According to Nielsen, green versions of conventional cleaning brands like Tide are underperforming niche brands like Seventh Generation. The Clorox Greenworks line, marketed on the basis of its eco- safety brand benefit, is finding it difficult to compete with stand-alone brands like 409, Lysol and Windex. Greenworks’ poor sales performance since the Recession suggests this line oriented strategy, while efficient, is not effective at a time when consumers are cutting back on cleaners overall and 32% of ‘dark green’ consumers are making their own eco-safe products at home.
2. What cross-brand pairings do consumers find compelling? How can I leverage complementary brands in my marketing?
Some brands naturally go together. Captain and Coke. Facebook and Zynga. iPhone and Verizon. Rather than try to duplicate another brand’s magic, find a way to partner with them to innovate new ideas, cross-promote or co-pack.
In the apparel category, Madewell offers a full line of jeans, tops, and accessories. Yet the brand is savvy enough to know their customers want the Madewell ‘look’, but not necessarily the Madewell label head to toe. By carefully inviting selected brands to their store, they give the customer what she wants without diminishing the Madewell brand. Likewise, we’ve learned there are natural pairings in the supermarket. A basket analysis would quickly spot many opportunities for CPG products used to make quick one dish meals. These brands have more to gain from cooperating than from trying to duplicate the ‘look’ via a meal kit.
3. Will a line extension dilute or enhance the brand? Would a new brand with an endorsement prove more valuable to consumers?
Brand extensions, particularly those that cross categories, offer short term efficiencies at launch, but may not optimize the revenue opportunity long-term. Endorsements offer a way to enjoy some of the credibility, without giving up the chance to be a stand-alone brand, competing for customers on its own merits.
The Skinny Girl line of cocktail mixers has succeeded by capitalizing on the well-known desire of young women to avoid unnecessary calories. While any number of spirits companies could have created this female-targeted stand-alone brand, it was natural foods chef and entrepreneur, Bethany Frankel, who seized the opportunity that more established brands missed. Now, after being acquired by Beam in 2011, Skinny Girl in turn must decide how it wants to grow its brand. Will it extend to other spirits categories like wine and vodka or launch other gender-specific products? Beam has already shown a willingness to capitalize on the gender-specific marketing opportunity with stand-alone brands like Red Stag (a black cherry infused bourbon) and rosé-flavored Courvoisier cognac (half the calories). In each case, they chose to endorse the new brand with Jim Beam to maximize appeal to the new target,.rather creating a flavor line extension.
As consumer decision-making shifts to product level criteria, it may be time to take a look at your brand architecture and line marketing strategies. Strategies that worked even a few years ago may not be aligned with how consumers, especially younger consumers, are purchasing today. Stand-alone brands, subbrands and endorsed brands may merit a second look.