Brand architecture is often discussed but
little understood. Although it is one of
the most important areas of business
strategy and management, it rarely gets
the focus or recognition it deserves.
The generally accepted definition of
brand architecture is that it is an organising
structure for how a company manages
its brands. It specifies certain brand
roles and the nature of relationships
between brands.
For many companies, the first stage of
creating brand architecture is simply to
compose a document setting out a brand
charter that provides relevant guidelines
to the marketing managers. But true
architecture needs to go much deeper to
have a real impact on the bottom line.
Models of brand architecture
There are certain key types of brand
architecture now used in firms across
the world.
A house of brands: this involves a set
of stand-alone brands and sub-brands,
each maximising the parent firm’s
impact on a market. It clearly positions
brands with functional benefits and
attempts to dominate niche segments.
Within the house of brands, there are
a number of subcategories:
Mother brand: The mother brand is
the primary name and image for a company.
It can then be stretched by subbrands
but remains the organisation’s
overall reference for all other brands or
products.
Shadow endorsers: A shadow
endorser brand is not connected visibly
to the main or endorsed brand, but many
consumers know about the link. This
subcategory provides some of the advantages
of having a known organisation
backing the brand, while minimising any
association contamination. The relationship
between confectionery companyCadbury and its organic brand Green &
Black’s is a good example.
Even when the brands are not visibly
linked, the relationship makes a statement
about each brand, especially when
the link is discovered. It makes clear that
the parent organisation realises that the
shadow-endorsed brand represents a
totally different product and market segment.
Token endorser brands:This is a portfolio
of brands pulled together by the
endorsement of a common organisation
or body. The role of the token endorser is
to provide some reassurance and credibility.
An example is a logo such as the
GE light bulb or The Soil Association
mark on organic goods.
Linked brand names: This is where a
name with common elements creates an
implicit or implied endorser. For example,
McDonald’s prefaces its products
with ‘Mc’, such as McNugget or
McPotato. A linked name provides the
benefits of a separate brand name without
having to establish a second name
from scratch and link it to a master
brand.
brand strategy october 2006
Brand architecture ResearchBut as well as the house of brands
style of architecture, there is also
another type of overarching strategy:
A house brand: A house brand uses
one single master brand to span a set of
product offerings and sub-brands. Any
sub-brands do not have their own specific
brands but merely have descriptive
names to explain their function.
International expansion and consumer
needs for reassurance about product
quality and reliability are resulting
in a shift toward this type of corporate
endorsement of product brands. It helps
to forge a global corporate identity for
the firm and gathers its products under
a worldwide umbrella – generating potential
cost savings through promotion of
the corporate brand rather than multiple
independent product names.
Corporate endorsement of productlevel
brands is increasingly used as a
mechanism to integrate brand structure
across country markets. For example,
Cadbury uses the Cadbury name on all its
confectionery products alongside product
brands such as Dairy Milk. Equally,
a house brand is sometimes used on a
product business worldwide. For example,
Akzo Nobel places the Sikkens name
on all its paint products.
Increasingly, new products and
variants are launched under existing
brand names to take advantage of
their strength and consumer awareness.
Mars, for example, has launched an icecream
line as well as a soft drink under
the Mars brand name. Cadbury’s Milk
Tray has been extended to desserts,
leveraging the brand’s association with
‘creaminess’.
Tuesday, December 15, 2009
Monday, December 14, 2009
Case study: Harley Davidson
It's one thing for people to buy your product or service, but it's another for them to tattoo your logo on their biceps.
Is there any another company in the world that works harder to build genuine relationships with their customers than the Harley-Davidson Motor Company? Harley-Davidson is an outstanding example of a company that has created loyalty through a pattern of steadfast interactions with its customers. How easy is it for your customers to interact with you? Could you reinvent the customer experience in ways that would strengthen the sense of affiliation that the customer has with the products and services of your company?
William Harley and Arthur Davidson, both in their early twenties, built their first motorcycle in 1903. During their first year, the company's entire output was only 1 motorbike; however, by 1910, the company had sold 3,200. Movies such as Easy Rider made Harleys a cultural icon and soon the company attracted people who loved its bad-boy mystique, powerfulness, rumbling voice, distinctive roar, and toughness. It sounded like nothing else on the road.
The Harley-Davidson Motor Company has had its ups and downs, and at times, the downs seemed as if they would end in bankruptcy. In the sixties, Honda, Kawasaki, and Yamaha invaded the American market, and when sales at Harley-Davidson dropped drastically due to decreasing quality and increasing competition, the company began to look for buyers and was finally sold. However, the new owners of Harley Davidson knew little about how to restore profitability. The quality became so bad that dealers had to place cardboard under bikes in the showroom to absorb the oil leaking.
Daniel Gross, in Forbes Greatest Business Stories of all Times, recounts how in 1981, with the aid of Citibank, a team of former Harley-Davidson executives began negotiations to reacquire the company and rescue it from bankruptcy. Among these executives was William Davidson, the grandson of the founder Arthur Davidson. In a classic leveraged buyout, they pooled $1 million in equity and borrowed $80 million from a consortium of banks lead by Citibank.
Harley's rescue team of loyal executives knew that the Japanese motorbike manufacturers were far ahead in regard to quality management, and they made a bold decision to tour a nearby Honda plant. Paradoxically, the Japanese had learned Total Quality Management from the Americans, Edwards Deming and Joseph Juran. The new business concept outlined by these two pioneers was a new management approach that, interestingly enough, had been rejected by American manufacturers. As a result, they offered this approach to Japanese manufactures that were eager to learn and implement it. Therefore, soon after their tour of the Honda plant, the Harley Davidson Motor Company decided to put into practice this originally rejected approach.
After implementing just-in-time inventory (JIT) and employee involvement, costs at Harley had dropped significantly; this meant that the company only needed to sell 35,000 bikes instead of 53,000 in order to break even. Their lobbying at Washington also helped, and import tariffs were raised temporarily from 4 to 40 percent on Japanese bikes. This extra breathing space was something that the U.S. motorbike company desperately needed for its recovery.
The combination of visiting a Japanese motorbike manufacturing plant and lobbying in Washington for import tariffs was a daring move on behalf of Harley's executives in their attempt to bring back profitability and growth to the company. Another important strategic move was the company's unique marketing and branding campaigns. Studies showed that about 75 % of Harley customers made repeat purchases, and executives quickly recognized a pattern that refocused the company's overall strategy. Simply put, they needed to find a way to appeal to the extraordinary loyalty of customers, which they found in creating a community that valued the experience of riding a Harley more than the product itself.
The sponsorship of a "Harley Owners' Group" has been one of the most creative and innovative strategies that has helped create the experience of this product. Without realizing it, Harley executives had pioneered a new paradigm that would be increasingly embraced by other industries in their quest to increase profitability by converting their product into an experience. The company started to organize rallies to strengthen the relationship between its members, dealers, and employees, while also promoting the Harley experience to potential customers. The Harley Owners' Groups became immensely popular; it allowed motorcycle owners to feel as if they belonged to one big family. In 1987, there were 73,000 registered members, and Harley now boasts to have no less than 450,000 members.
In 1983, the company launched a marketing campaign called SuperRide, which authorized over 600 dealerships to invite people to test-drive Harleys. Over 40,000 potential new customers accepted the invitation, and from then on, many customers were not just buying a motorcycle when they bought a Harley; instead, they were buying "the Harley Experience."
Harley-Davidson offered its customers a free one-year membership to a local riding group, motorcycle publications, private receptions at motorcycle events, insurance, emergency roadside service, rental arrangements on vacation, and a host of other member benefits. Branding the experience, not just the product, has allowed the company to expand how it captures value, including a line of clothing, a parts and accessories business, and Harley-Davidson Visa card.
If you were to scan the list of companies that delivered the greatest returns on investment during the 1990s, you would discover Harley-Davidson. Only a few companies have been successful in inventing entirely new business models, or profoundly reinventing existing ones. Harley-Davidson went from supplying motorcycles to antisocial raiders to selling a lifestyle to the aging bad boy wannabes caught in their midlife crises. Traditionally, Harley-Davidson bike owners came from the working and middle classes, but as quality and prices of the bad-boy-bikes rose, and with energetic marketing, the company soon attracted a different class of buyers-currently one third of Harley buyers are professionals or managers, and 60% are college graduates. The new customer segments of Harley are the Rolex Riders or the Rich Urban Bikers. Hell's Angels do not run in the same group anymore. Now there are groups of accountants, lawyers and doctors. Women also account for a significant portion of the new riders, and there are women-only riders clubs spreading all over the globe.
The future looks bright for the U.S. motorbike company. According to The Economist, overall U.S. sales increased over 20% in 2000, and more than 650,000 new motorcycles were sold in the U.S. in the same year, up from 539,000 the year before. Bike buyers spent an estimated $5.45 billion on new bikes in 2000.
Stay alert and get it early. The new branding paradigm is to sell a lifestyle, a personality and it is also about appealing to emotions of your customers. Increasingly, it will be more and more about creating an experience around the product. Brand managers and executives will need a new set of lenses. The rules have changed as well as the opportunities to maximize profitability and create value in the process. Nonetheless, the majority of companies continue to follow traditional ad campaigns and they seem to ignore the fact that the media has fragmented into hundreds of cable channels, thousands of magazine titles and millions of Internet pages.
Consumers are no longer sitting ducks for commercials; they are looking for new experiences. Whether it is the bad-boy-aura of the Harley riding experience, the exquisite coffee experience in Starbucks cafs, or the active participation in Net communities, more and more companies will need to follow these early new branding pioneers. They will need to look into the dynamics of their relationships with customers and the nature of their interaction. They will need to ask themselves some serious "out-of-the-box" questions if they want to move with the shifting value that is the result of constantly changing market conditions.
Branding has changed and so have marketing and advertising campaigns. New variability, heterogeneity where there was once homogeneity, newly emerging stratifications of wealth, new preferences, and new life styles are all characteristics of the 21st century customer that are here to stay. We better get used to it, at lease until the next paradigm is discovered. Remember, the companies that are creating new wealth are not just getting better; they are becoming different-mind-bogglingly different!
Saturday, December 12, 2009
Godrej : With new strategy
Purvita Chatterjee
The new Managing Director of Godrej Consumer Products Ltd (GCPL), Dalip Sehgal, is just back from a series of tours across the country, during which he acquainted himself with many of the 22,000 employees of the group.
Since he joined on April 1 this year, the former Hindustan Unilever veteran has met up with almost 80-85 per cent of Godrej Consumer’s employees spread across centres from Punjab to Guwahati.
The new MD of the Rs 1,460-crore GCPL brings with him a wealth of experience, having been the chief of the Rs 600-crore Godrej Hershey, not to mention the daunting responsibility of scaling up new businesses like HUL’s direct selling network, which he was handling earlier.
In fact, working for an FMCG company with a smaller base as compared to an MNC like HUL, has its advantages. As Sehgal says, “Unlike an MNC where the regional contribution forms a larger part of strategic decision-making, here the ability to decide locally is a huge positive.”
Besides, in a company with a smaller base, there is huge scope for growth. However, the challenge to grow brands as well as the topline and bottomline has not changed; something that Sehgal is well-versed with, given his 25 years with HUL.
GCPL, with its relatively less penetrated categories in personal care and hair colours, in fact, presents an opportunity for Sehgal to leverage his vast experience in the FMCG space.
“There is opportunity to grow in these categories and in spite of being the market leader in a category like hair colours, there is a lot we can do with what we have,” says Sehgal. He will be representing the second largest soap manufacturer in the country and pitting his flagship soap brands such as Cinthol and Godrej No. 1 against blockbuster brands such as Lifebuoy and Lux from his erstwhile company.
Expanding product portfolio
Today, GCPL is on the threshold of widening its product portfolio following the recent merger between itself and Godrej Hygiene whereby the latter’s brands, including Goodknight and Hit, would be added to its existing portfolio.
The recent restructuring within the Godrej group approved the proposed merger of Godrej Consumer Biz Pvt Ltd (GCBPL) and Godrej Hygiene Care Pvt Ltd (GHCPL) into GCPL.
GHCPL is a 100 per cent subsidiary of Godrej Industries Ltd (GIL) and GCBPL is a 100 per cent subsidiary company of Godrej & Boyce Manufacturing Co Ltd (G&B). GCBPL and GHCPL will be transferred to GCPL. The main purpose of merging these two entities is to acquire the 49 per cent stake in Godrej Sara Lee (GSL). Godrej Sara Lee is currently a 49:51 JV between Godrej Industries and Sara Lee with brands such as Goodknight, Hit, Jet, Ambipur, Brylcreem and Kiwi.
“This merger addresses the biggest issue of GCPL, namely, that of being a ‘limited product range’ company. Its portfolio now extends to soaps, hair colour, toiletries, hair care, interior perfume, shoe polish and mosquito repellent and thereby serves a case for business ‘re-rating’ in line with other consumer peers.
“With this merger, the Godrej Group brings one of its largest consumer portfolios under GCPL, which would help strengthen the distribution bandwidth of GCPL and bring about attractive valuations as Godrej Sara Lee has a slightly better margins profile and a similar growth profile to GCPL.
“In fact, we see this as a first step towards merging all the consumer businesses under GCPL and could be a precursor to the Godrej Group also bringing in its foods and beverages businesses — fruit juice, tea and the JV with Hershey — into the same entity,” says Nikhil Vora, Managing Director, IDFC SSKI Securities, in a report on the company.
Other FMCG analyst reports also indicate similar advantages from the merger. “We believe the merger of both these entities into GCPL will address the key issue of sustainable growth drivers as it will widen the company’s FMCG portfolio and give it better bargaining power in terms of distribution. Moreover, the merger will put the Godrej group on a stronger footing to buy out Sara Lee’s 51 per cent stake in Godrej Sara Lee, if the situation arises,” says a report from Angel Broking.
In fact, the process of streamlining FMCG operations within the Godrej group began with the formation of the leadership team when the three companies — Godrej Sara Lee, Godrej Consumer Products and Godrej Hershey — started sharing their resources.
“We would be deriving advantages of scale and synergies rather than merely existing as individual companies. The synergistic areas have already been tapped as part of the newly-formed FMCG leadership team whereby the three companies have been sharing resources such as the supply chain and warehousing facilities. Even while selling in the rural markets, a common distributor would run the van operations to sell the products from these three companies,” explains Sehgal.
Tie up with Future Group
Smirnoff’s cool extension:
They don't make brand extensions more successful. Smirnoff Ice sold 4.7 million, nine-litre cases in the last year. It has a presence in 28 countries and some suggest that it is so successful that it has begun to overshadow its parent brand, Smirnoff vodka.
Andy Fennell, president of global marketing for Smirnoff, claims that the brand started life in exactly the same way as all its parent company Diageo's innovations. "We are always looking at consumers and attempting to understand how we can satisfy them better than any current offerings.
"Then we look at our existing brands and see if we can improve them in any way to fill the gap. If we still feel that there is something missing, we'll consider extending and leveraging the values of an existing brand into a new product. If that doesn't work, we'll consider a completely new brand."
In the case of Smirnoff Ice, the company believed that there was a gap in the market for a drink that would appeal to both beer and spirit drinkers and which contained some elements of each. It also felt that the core values of Smirnoff vodka were strong enough to be adapted into a different form. "It also reassures the trade customers, like pubs and bars, if you extend an existing name," comments Fennell.
The company launched the opaque drink in the UK in January 1999 and the US in January 2000. The American and non-American formats are different. The non-US version (available in the UK) is closer to its parent Smirnoff brand, as it is a vodka-based drink. The American version is a non-vodka malt-based drink, which brings it closer to beer in that market.
Fennell explains: "We were looking for a drink in each market that would appeal to consumers in situations where they would previously have drunk beer or spirits. But the US and non-US version don't taste any different."
Smirnoff Ice is unusual in the ready-to-drink category because it is overtly targeted at men but also appeals to women. Alcopops have traditionally been the domain of female drinkers and the brand's success among both sexes is unusual for the category. Fennell claims that sales also tend to be split equally between the genders, except in Canada, where it is skewed towards male drinkers.
This gender-neutral positioning has been backed up with last year's launch of Smirnoff Black Ice, a reformulated version of Smirnoff Ice. The new clear drink was backed with an 11m [pounds sterling] marketing campaign in the UK. "This version of the drink is designed to convert those beer-drinking consumers who haven't been convinced by the ready-to-drink sector yet," explains Fennell.
It's too early to tell if Black Ice will be a success for Smirnoff, but Fennell's (Any of several aromatic herbs having edible seeds and leaves and stems) insistence...
Thursday, December 10, 2009
Brand – Extension (Reference Section…..)
In its 65-year-old history, Dettol, the brand now owned by Reckitt-Benckiser, has seen some seven or eight product extensions — from mouthwash to prickly heat powder. One more — a floor cleaner called Dettol Gold — is being test marketed in Kolkata and Chennai. An anti-dandruff shampoo is also reportedly on the launch-pad.
Now consider this. From Rs 30-odd crore in 1991, Dettol is a Rs 230-crore brand today. This was also the period when most of the product extensions took place. But if you thought this impressive growth was the result of all those hectic product extensions, think again.
Almost three-fourths of today’s turnover comes from Dettol soap, which was introduced in the eighties. The core antiseptic liquid accounts for less than a quarter of Dettol’s sales. The rest — shaving cream, medicated plaster, mouthwash, prickly heat powder, antiseptic cream and so on — make up a minuscule percentage.
Clearly, with the notable exception of soaps, Dettol’s efforts to stretch its brand equity to other contiguous products have been a failure. Though the specific reasons for failure varied in each case, the overall result highlights a unique problem for marketers — the limits of transferring the core values of a powerful brand to other product categories.
Dettol’s brand values as an antiseptic were so strong, that few of the new products were able to assimilate the core properties of its powerful mother brand credibly. This process was tougher because with each extension, Reckitt found itself having to deal with new markets and new competitors in each of them.
To be sure, the decision to opt for product extensions can hardly be faulted. Launched in 1936, Dettol antiseptic liquid was as generic to its category as Xerox became to copiers. There was little that needed to be done to promote it — Dettol’s brand equity was built through sheer usage over the years.
Things were comfortable till as late as 1980 when the first signs of stagnation began to surface. Numerous research studies concluded that though Dettol had a high penetration level and almost all households kept a bottle of it handy, they rarely used it. So to stoke sales, Reckitt (then Reckitt Colman of India) decided to expand Dettol’s usage beyond cuts and bruises.
This resulted in a communication campaign that showed that Dettol could be used as an all-purpose antiseptic — while shaving, rinsing babies’ nappies, as a general disinfectant and so on (students can get a glimpse of Brand widths and widths). Soon, all these uses pointed to a number of possible extensions, a fact that subsequent consumer research validated.
Dettol soap was first off the racks. Strangely, though it may be a winner today, it was not an outright success initially. This was because Reckitt & Colman launched Dettol soap on a premium platform — which was way off the brand’s core properties of hygiene and cleanliness.
When the product bombed, Reckitt quickly relaunched it the following year as a “100 per cent germ fighter” — a positioning that has worked so well that Dettol soap commands a share of 11 per cent of the premium soap market today.
In the mid-1990s, increasing competition within the soap category sent the company looking for a fresh initiative. The major competition now came from Hindustan Lever’s Lifebuoy, which the company was trying to upgrade by introducing it in liquid form in a plastic dispenser.
That effort bombed mainly because the dispensers proved defective and there was a dissonance with Lifebuoy’s value-for-money proposition.
Still, given urban markets’ penchant for convenience products, the soap-in-a-dispenser gave well-entrenched Dettol soap an opportunity to introduce a similar product. According to industry sources, the liquid soap today accounts for over 7 per cent of Dettol soap’s sales.
Dettol liquid soap worked because its contemporary and convenient format actually strengthened the brand’s core values and bought the brand out of the the first-aid boxes into the household. The frequency of usage, too, has substantially jumped over the years.
Encouraged by the successful extension into liquid soap, Dettol added two variants over the last one year — Dettol Extra with moisturiser and a glycerine variant, Dettol Junior (which was launched last month). It is too early to judge the performance of Junior, but company sources say Extra has not been able to induce trials.
No one has ascribed a reason to this, but given the soap’s history, it can be assumed that the moisturiser put Dettol in the beauty soap sphere, where it didn’t quite fit. Retailers say Extra is being clubbed with other Reckitt products as a freebie to induce trials. While this is normal practice with most FMCG marketers, it is also true that Dettol is having to do this more often. Extra’s fate has, in fact, cast doubts on the fate of Junior.
As Jagdeep Kapoor, managing director of Samsika Marketing, a consultancy, points out, when the product offers a single-minded proposition of protection, the brand extension works. “But when the proposition becomes partly cosmetic, the chances of success is reduced.”
In the case of soap, where the extension worked well, the product maintained the core value of protection against germs without cosmetic appeal. But beyond this core area, Dettol is on weak ground. That is why when Reckitt tried to add cosmetic appeal for its soap by adding moisturiserin Dettol Extra, the gameplan didn’t work.
The fate of medicated plasters and shaving creams has, however, been a bit ignominous. In terms of usage, the forays into both markets in the early nineties also made sense. The problem, though, was that the market for both was not large enought to justify the relatively heavy investments that product extensions required.
The launch of medicated plasters, in fact, was more a combative strategy against Johnson & Johnson (J&J) rather than an extension that flowed from market needs. This was around the time J&J had bought the rights to market to Savlon, Dettol’s only rival in domestic antiseptic liquids.
With its traditional turf under threat, Dettol decided to return the compliment by attacking J&J’s hegemony in medicated plasters. Dettol medicated plaster was introduced to coincide with the relaunch of Savlon.
he extension made sense because Dettol had established credentials as a germ protector for cuts and bruises. The problem was that, at just Rs 20 crore, the market was too small. Not only that, this market had a feisty number two in Bieirsdorf’s Handy Plast, which was already giving J&J a run for its money in several markets.
With medicated plaster, Reckitt had hoped to divert some of the resources that J&J would put behind Savlon. True, J&J took defensive action by introducing many variants to Band Aid. Also, its promotion of Savlon was too weak to take this stagnant market by storm.
Thus, once the Savlon threat was over, Dettol medicated plaster vanished from the ads — and so did the aggression that Reckitt needed to put behind the product to sell it in this tough market. This weakened its presence in the retail segment, where the real volumes are. A former senior Reckitt executive says Dettol Plaster has a strong franchise only in clinics and institutions today.
Similarly, the shaving creams market was small (about Rs 50 crore at the time), but Dettol had strong compulsions to get into that category. A study commissioned by Reckitt in 1996 revealed that about 40 per cent of regular shavers used some kind of antiseptic lotion after shaving, and 30 per cent used Dettol liquid. The same study also showed that those who used Dettol didn’t feel the need to use any after shave lotion.
Moreover, the average frequency of purchase of Dettol liquid was once every ten months. That sent Reckitt looking for a product extension that could satisfy the same need and be picked up more often. Ergo why not try shaving creams and gels?
This was logical, but Dettol made a mistake of venturing into a market in which it didn’t have any expertise. Shaving creams and gels are part-utility and part-cosmetic products, and Dettol’s two-in-one proposition didn’t address the latter need at all (after all, no one would have wanted to smell of Dettol after a shave). It was the same mistake that Dettol later made with Dettol Extra.
Not surprisingly, the gel was withdrawn within a year of its launch. The shaving cream is still available, but it’s no star. Since the market for shaving creams has hardly grown — it’s just Rs 70 crore now — Reckitt saw no reason to splurge on advertising for this product.
By 1998, however, there was a desperate need to drive consumption of Dettol antiseptic. The plant at Mysore was, reportedly, working at a capacity utilisation of about 55 per cent. “That was when Reckitt started thinking of a large number of extensions to achieve a higher capacity utilisation for Dettol,” says the former executive.
The company had done everything on the pack sizes front to push sales. This included bulk packs for institutions and smaller bottles for retail buyers. There were even plans to introduce sachets, but this was shelved because the product formulation did lend itself to this form of packaging.
In the mid 1990s, Reckitt tried to balance its product portfolio by bringing in offerings that required regular usage — like floor cleaner Lizol, insecticide Mortein, a re-launched ultramarine blue brand Robin, etc.
Mortein was a great success and accounts for almost one-third of Reckitt-Benckiser’s turnover. But stiff competition in other categories didn’t really allow Reckitt’s other products to quickly grab volumes (Lizol, for instance contributes less than Rs 18 crore even after four years). So, in 1997, to drive growth, Reckitt had to turn back to its top-of-the-mind Dettol.
But the earlier lessons had clearly not been assimilated. In 2000, Reckitt made the same mistake when it entered the talc market with Dettol prickly heat talc. The size of the talcum powder market is roughly Rs 750 crore, but the prickly heat segment accounts for less than 15 per cent of that. Two months ago, Dettol talc was phased out.
To be fair, Dettol’s failures at brand extension are no exception. The difference, however, is the consistency with which its extensions have bombed.
Remember dear students, that There are two aspects to brand extension. One is the brand name, the core properties and its end use. The second is the relevance of the category to which the brand is being extended. Dettol suffered on both counts.
“When brands with a narrow set of values transcend into a functional extension then there could be a problem,”
Pond’s attempts to extend its brand into toothpaste in the early 1990s is a case in point. A strong brand in personal care area was extended to personal hygiene. The brand colours were maintained on the pack, the launch was high-profile, yet the product sank without a trace. There was too much dissonance between Pond’s, the beauty brand, and a functional product like toothpaste.
When brands have values that are as strong as Dettol or Pond’s (which became more circumspect when it came to extensions), companies tend to get into the straitjacket of being forced to function within the parameters defined by the brand.
The dangers of constant failures are obvious. “Companies can weaken the core brand proposition through foolish extension strategies.”
Certainly, the extensions have done little to strengthen the mother brand. This was reportedly a point that the new marketing director, Ernesto Blanch, pointed out when he joined the Indian company this January.
Strangely, while Dettol was extended into different new categories, the company did little to strengthen the mother brand — Dettol antiseptic liquid.
“Can you remember the last time time you saw an ad for Dettol antiseptic liquid?” asks a former Reckitt executive.
Though this probably hasn’t weakened Dettol’s brand image, it hasn’t solved the problem of low usage, as the extension into floor cleaners suggests.
The logic of these extensions are hard to see. Would a housewife, who is being urged to use Dettol Junior as a protective soap for her child or use Dettol shampoo on her hair, agree to use the same brand to clean her floors?
Kapoor of Samsika suggests that these extensions will eventually impinge on the mother brand: “It is like over-squeezing the sugarcane many times over to extract the juice which may no longer be sweet. Hence caution must be exercised.”
Certainly, the company has assimilated some of the mistakes of the past. It has now put aside a quarter of its media spend for antiseptic liquid. But how far this will help its variants is the real challenge.
Now consider this. From Rs 30-odd crore in 1991, Dettol is a Rs 230-crore brand today. This was also the period when most of the product extensions took place. But if you thought this impressive growth was the result of all those hectic product extensions, think again.
Almost three-fourths of today’s turnover comes from Dettol soap, which was introduced in the eighties. The core antiseptic liquid accounts for less than a quarter of Dettol’s sales. The rest — shaving cream, medicated plaster, mouthwash, prickly heat powder, antiseptic cream and so on — make up a minuscule percentage.
Clearly, with the notable exception of soaps, Dettol’s efforts to stretch its brand equity to other contiguous products have been a failure. Though the specific reasons for failure varied in each case, the overall result highlights a unique problem for marketers — the limits of transferring the core values of a powerful brand to other product categories.
Dettol’s brand values as an antiseptic were so strong, that few of the new products were able to assimilate the core properties of its powerful mother brand credibly. This process was tougher because with each extension, Reckitt found itself having to deal with new markets and new competitors in each of them.
To be sure, the decision to opt for product extensions can hardly be faulted. Launched in 1936, Dettol antiseptic liquid was as generic to its category as Xerox became to copiers. There was little that needed to be done to promote it — Dettol’s brand equity was built through sheer usage over the years.
Things were comfortable till as late as 1980 when the first signs of stagnation began to surface. Numerous research studies concluded that though Dettol had a high penetration level and almost all households kept a bottle of it handy, they rarely used it. So to stoke sales, Reckitt (then Reckitt Colman of India) decided to expand Dettol’s usage beyond cuts and bruises.
This resulted in a communication campaign that showed that Dettol could be used as an all-purpose antiseptic — while shaving, rinsing babies’ nappies, as a general disinfectant and so on (students can get a glimpse of Brand widths and widths). Soon, all these uses pointed to a number of possible extensions, a fact that subsequent consumer research validated.
Dettol soap was first off the racks. Strangely, though it may be a winner today, it was not an outright success initially. This was because Reckitt & Colman launched Dettol soap on a premium platform — which was way off the brand’s core properties of hygiene and cleanliness.
When the product bombed, Reckitt quickly relaunched it the following year as a “100 per cent germ fighter” — a positioning that has worked so well that Dettol soap commands a share of 11 per cent of the premium soap market today.
In the mid-1990s, increasing competition within the soap category sent the company looking for a fresh initiative. The major competition now came from Hindustan Lever’s Lifebuoy, which the company was trying to upgrade by introducing it in liquid form in a plastic dispenser.
That effort bombed mainly because the dispensers proved defective and there was a dissonance with Lifebuoy’s value-for-money proposition.
Still, given urban markets’ penchant for convenience products, the soap-in-a-dispenser gave well-entrenched Dettol soap an opportunity to introduce a similar product. According to industry sources, the liquid soap today accounts for over 7 per cent of Dettol soap’s sales.
Dettol liquid soap worked because its contemporary and convenient format actually strengthened the brand’s core values and bought the brand out of the the first-aid boxes into the household. The frequency of usage, too, has substantially jumped over the years.
Encouraged by the successful extension into liquid soap, Dettol added two variants over the last one year — Dettol Extra with moisturiser and a glycerine variant, Dettol Junior (which was launched last month). It is too early to judge the performance of Junior, but company sources say Extra has not been able to induce trials.
No one has ascribed a reason to this, but given the soap’s history, it can be assumed that the moisturiser put Dettol in the beauty soap sphere, where it didn’t quite fit. Retailers say Extra is being clubbed with other Reckitt products as a freebie to induce trials. While this is normal practice with most FMCG marketers, it is also true that Dettol is having to do this more often. Extra’s fate has, in fact, cast doubts on the fate of Junior.
As Jagdeep Kapoor, managing director of Samsika Marketing, a consultancy, points out, when the product offers a single-minded proposition of protection, the brand extension works. “But when the proposition becomes partly cosmetic, the chances of success is reduced.”
In the case of soap, where the extension worked well, the product maintained the core value of protection against germs without cosmetic appeal. But beyond this core area, Dettol is on weak ground. That is why when Reckitt tried to add cosmetic appeal for its soap by adding moisturiserin Dettol Extra, the gameplan didn’t work.
The fate of medicated plasters and shaving creams has, however, been a bit ignominous. In terms of usage, the forays into both markets in the early nineties also made sense. The problem, though, was that the market for both was not large enought to justify the relatively heavy investments that product extensions required.
The launch of medicated plasters, in fact, was more a combative strategy against Johnson & Johnson (J&J) rather than an extension that flowed from market needs. This was around the time J&J had bought the rights to market to Savlon, Dettol’s only rival in domestic antiseptic liquids.
With its traditional turf under threat, Dettol decided to return the compliment by attacking J&J’s hegemony in medicated plasters. Dettol medicated plaster was introduced to coincide with the relaunch of Savlon.
he extension made sense because Dettol had established credentials as a germ protector for cuts and bruises. The problem was that, at just Rs 20 crore, the market was too small. Not only that, this market had a feisty number two in Bieirsdorf’s Handy Plast, which was already giving J&J a run for its money in several markets.
With medicated plaster, Reckitt had hoped to divert some of the resources that J&J would put behind Savlon. True, J&J took defensive action by introducing many variants to Band Aid. Also, its promotion of Savlon was too weak to take this stagnant market by storm.
Thus, once the Savlon threat was over, Dettol medicated plaster vanished from the ads — and so did the aggression that Reckitt needed to put behind the product to sell it in this tough market. This weakened its presence in the retail segment, where the real volumes are. A former senior Reckitt executive says Dettol Plaster has a strong franchise only in clinics and institutions today.
Similarly, the shaving creams market was small (about Rs 50 crore at the time), but Dettol had strong compulsions to get into that category. A study commissioned by Reckitt in 1996 revealed that about 40 per cent of regular shavers used some kind of antiseptic lotion after shaving, and 30 per cent used Dettol liquid. The same study also showed that those who used Dettol didn’t feel the need to use any after shave lotion.
Moreover, the average frequency of purchase of Dettol liquid was once every ten months. That sent Reckitt looking for a product extension that could satisfy the same need and be picked up more often. Ergo why not try shaving creams and gels?
This was logical, but Dettol made a mistake of venturing into a market in which it didn’t have any expertise. Shaving creams and gels are part-utility and part-cosmetic products, and Dettol’s two-in-one proposition didn’t address the latter need at all (after all, no one would have wanted to smell of Dettol after a shave). It was the same mistake that Dettol later made with Dettol Extra.
Not surprisingly, the gel was withdrawn within a year of its launch. The shaving cream is still available, but it’s no star. Since the market for shaving creams has hardly grown — it’s just Rs 70 crore now — Reckitt saw no reason to splurge on advertising for this product.
By 1998, however, there was a desperate need to drive consumption of Dettol antiseptic. The plant at Mysore was, reportedly, working at a capacity utilisation of about 55 per cent. “That was when Reckitt started thinking of a large number of extensions to achieve a higher capacity utilisation for Dettol,” says the former executive.
The company had done everything on the pack sizes front to push sales. This included bulk packs for institutions and smaller bottles for retail buyers. There were even plans to introduce sachets, but this was shelved because the product formulation did lend itself to this form of packaging.
In the mid 1990s, Reckitt tried to balance its product portfolio by bringing in offerings that required regular usage — like floor cleaner Lizol, insecticide Mortein, a re-launched ultramarine blue brand Robin, etc.
Mortein was a great success and accounts for almost one-third of Reckitt-Benckiser’s turnover. But stiff competition in other categories didn’t really allow Reckitt’s other products to quickly grab volumes (Lizol, for instance contributes less than Rs 18 crore even after four years). So, in 1997, to drive growth, Reckitt had to turn back to its top-of-the-mind Dettol.
But the earlier lessons had clearly not been assimilated. In 2000, Reckitt made the same mistake when it entered the talc market with Dettol prickly heat talc. The size of the talcum powder market is roughly Rs 750 crore, but the prickly heat segment accounts for less than 15 per cent of that. Two months ago, Dettol talc was phased out.
To be fair, Dettol’s failures at brand extension are no exception. The difference, however, is the consistency with which its extensions have bombed.
Remember dear students, that There are two aspects to brand extension. One is the brand name, the core properties and its end use. The second is the relevance of the category to which the brand is being extended. Dettol suffered on both counts.
“When brands with a narrow set of values transcend into a functional extension then there could be a problem,”
Pond’s attempts to extend its brand into toothpaste in the early 1990s is a case in point. A strong brand in personal care area was extended to personal hygiene. The brand colours were maintained on the pack, the launch was high-profile, yet the product sank without a trace. There was too much dissonance between Pond’s, the beauty brand, and a functional product like toothpaste.
When brands have values that are as strong as Dettol or Pond’s (which became more circumspect when it came to extensions), companies tend to get into the straitjacket of being forced to function within the parameters defined by the brand.
The dangers of constant failures are obvious. “Companies can weaken the core brand proposition through foolish extension strategies.”
Certainly, the extensions have done little to strengthen the mother brand. This was reportedly a point that the new marketing director, Ernesto Blanch, pointed out when he joined the Indian company this January.
Strangely, while Dettol was extended into different new categories, the company did little to strengthen the mother brand — Dettol antiseptic liquid.
“Can you remember the last time time you saw an ad for Dettol antiseptic liquid?” asks a former Reckitt executive.
Though this probably hasn’t weakened Dettol’s brand image, it hasn’t solved the problem of low usage, as the extension into floor cleaners suggests.
The logic of these extensions are hard to see. Would a housewife, who is being urged to use Dettol Junior as a protective soap for her child or use Dettol shampoo on her hair, agree to use the same brand to clean her floors?
Kapoor of Samsika suggests that these extensions will eventually impinge on the mother brand: “It is like over-squeezing the sugarcane many times over to extract the juice which may no longer be sweet. Hence caution must be exercised.”
Certainly, the company has assimilated some of the mistakes of the past. It has now put aside a quarter of its media spend for antiseptic liquid. But how far this will help its variants is the real challenge.
Sunday, November 29, 2009
Corporate re-branding of AOL
Corporate re-branding is sometimes seen as an inevitable exercise while it appears to be a normal practice for global trendsetters moving away or making alterations to their brands. AOL, a longer version of American Online is an American company that provides internet services and social media networking. The internet company has announced its ongoing process of re-branding itself. AOL will spin-off from Time Warner which has been operating it since the year 2000. The merger between AOL and Time Warner was a destined ill-fated journey on account of bad advisory. Finally, AOL shares will start trading independently from early December 2009 in NYSE.
Aol. New Corporate Logos
Trading as a separate identity called for a new corporate identity to help revive the company’s tail spin journey. As a part of the re-branding process, its brand, ‘AOL’ will now be symbolized as ‘Aol.’ with an essential dot in the end. A view master, a high heeled shoe and a kissing couple are but few background features that are set to be replaced with some other weird backgrounds like, a gold fish, some four abstract scrawls and an obscene hand gesture. The logos were designed by Wolff Olins, the agency that came up with the logo of London 2012 Olympic Games.
Commenting on the Re-branding process, Tim Armstrong, the chairman and chief executive of AOL, said the branding was “uniquely dynamic”, while his marketing team added: “The identity … is a platform for expression and creativity reflecting the content, products and services Aol offers.” Yes, we at Webalue.com, agree to some extent but there are larger issues that ought to be attended. I formed three easy interconnected steps for Aol. To follow,
Step 1. Global Brand: Let’s face it. We all know AOL has been trying to establish itself as a global brand. The company has yet failed to shed off, ‘American Online’ as a spot on alternative to ‘AOL’. Non-U.S countries have thus not proved to be as profitable to the company.
Step 2. Being Global, Acting Local: AOL will need to kick off major campaigns, to integrate its brand within foreign cultures. Until the day, these cultures (or countries) adopt AOL into their lives, this company aint going anywhere. In emerging countries like India, where Internet usage has been achieving record growth year-on-year, AOL has a great opportunity. But a major chunk of the market would rather opt for Yahoo or Rediff.com (an Indian portal). AOL is still largely perceived to be American Online, which straight away disassociates non-US consumers.
Step 3. Cultural Dimensions: (This one’s funny) How many times a year do we come across companies committing cultural blunders. Some brand names sound offensive in some countries, while other logos find themselves emitting wrong gestures and signals. Well, here we go again. ‘AOL’ (oops.. or should I say, ‘Aol.’) is all set to be a classic cultural blunder in ITALY. One of their new logo background, has a rock-concert-like hand gesture (See in the Image above) which in Italy indicates a man whose wife has been unfaithful. (Gulp…!!!) Hope Aol(dot) addresses this before launch in Italy.
Apart from these 3 steps, there is another concern that I feel is worth a review. The company recently announced a major lay-off of over 1/3 workforce accounting to cost-cutting measures. This could have well been a gist of actions taken during the AOL-Time Warner’s bad divorce. But, it might have left a bad scar on the retained employees of Aol-dot. As a new company, establishing new and some changed brand values, it is important for the management and the employees to bond together and work as team. Cost-cutting may have been essential, but the timing could have well been wrong. On the flip-side, though it is also possible that the management has foreseen this internal branding risk and would have wanted to leave all negativity with AOL while starting afresh with Aol-dot.
We’ll keep a watch on ‘Aol.’, and keep you updated. So, do we think this company is all-set to take up new highs? Well… uhhh.. Nope not yet. Unless ofcourse if it looks up into addressing the above mentioned 3 steps in one way or the other.
Aol. New Corporate Logos
Trading as a separate identity called for a new corporate identity to help revive the company’s tail spin journey. As a part of the re-branding process, its brand, ‘AOL’ will now be symbolized as ‘Aol.’ with an essential dot in the end. A view master, a high heeled shoe and a kissing couple are but few background features that are set to be replaced with some other weird backgrounds like, a gold fish, some four abstract scrawls and an obscene hand gesture. The logos were designed by Wolff Olins, the agency that came up with the logo of London 2012 Olympic Games.
Commenting on the Re-branding process, Tim Armstrong, the chairman and chief executive of AOL, said the branding was “uniquely dynamic”, while his marketing team added: “The identity … is a platform for expression and creativity reflecting the content, products and services Aol offers.” Yes, we at Webalue.com, agree to some extent but there are larger issues that ought to be attended. I formed three easy interconnected steps for Aol. To follow,
Step 1. Global Brand: Let’s face it. We all know AOL has been trying to establish itself as a global brand. The company has yet failed to shed off, ‘American Online’ as a spot on alternative to ‘AOL’. Non-U.S countries have thus not proved to be as profitable to the company.
Step 2. Being Global, Acting Local: AOL will need to kick off major campaigns, to integrate its brand within foreign cultures. Until the day, these cultures (or countries) adopt AOL into their lives, this company aint going anywhere. In emerging countries like India, where Internet usage has been achieving record growth year-on-year, AOL has a great opportunity. But a major chunk of the market would rather opt for Yahoo or Rediff.com (an Indian portal). AOL is still largely perceived to be American Online, which straight away disassociates non-US consumers.
Step 3. Cultural Dimensions: (This one’s funny) How many times a year do we come across companies committing cultural blunders. Some brand names sound offensive in some countries, while other logos find themselves emitting wrong gestures and signals. Well, here we go again. ‘AOL’ (oops.. or should I say, ‘Aol.’) is all set to be a classic cultural blunder in ITALY. One of their new logo background, has a rock-concert-like hand gesture (See in the Image above) which in Italy indicates a man whose wife has been unfaithful. (Gulp…!!!) Hope Aol(dot) addresses this before launch in Italy.
Apart from these 3 steps, there is another concern that I feel is worth a review. The company recently announced a major lay-off of over 1/3 workforce accounting to cost-cutting measures. This could have well been a gist of actions taken during the AOL-Time Warner’s bad divorce. But, it might have left a bad scar on the retained employees of Aol-dot. As a new company, establishing new and some changed brand values, it is important for the management and the employees to bond together and work as team. Cost-cutting may have been essential, but the timing could have well been wrong. On the flip-side, though it is also possible that the management has foreseen this internal branding risk and would have wanted to leave all negativity with AOL while starting afresh with Aol-dot.
We’ll keep a watch on ‘Aol.’, and keep you updated. So, do we think this company is all-set to take up new highs? Well… uhhh.. Nope not yet. Unless ofcourse if it looks up into addressing the above mentioned 3 steps in one way or the other.
Tuesday, November 10, 2009
The Branding of great Indian railways!!!!
Chennai central railway station
Characters: Sabu and Sandeep
Sabu: hey nice to meet you sandeep, which train? Colgate or Pepsi?
Sandeep : No Sabu, did not get tickets for Colgate, trip was not planned, so got it in Rexona, which is your train? Lux or Nike?
Sabu: Nike, need to reach early morning, now Nike is super fast you know?
Sandeep: Gr8, ok then time for my Rexona, see you have a nice trip
Sabu: Same to you also...
You think these two characters have gone nuts? ..........
Sorry they are as normal and sane as you. They are just boarding their trains.
Recently India's first branded train was flagged off from Banglore, south India. Kurkure Bangalore-Hubli Summer Special and Kurkure Bangalore-Chennai weekly train. The first branded train of Indian Railways named after a corporate brand — Kurkure, brand owned by Pepsi. Brand name would feature along with the train's name in all announcements, reserved tickets, reservation charts, destination boards etc.
The corporates will provide cleaner coaches and toilets on the special trains,
( ha ......ready for a train journey?) The brand would also pay an advertisement fee to the Railways. Passengers on board the Nagercoil-bound train received free sachets of Kurkure as an inaugural gesture.
The Pepsi-owned Kurkure bagged the brand train tender, floated by the Railways. Though companies like Airtel, Tata Tele and Sony Ericsson had also participated in the bid, Kurkure had the highest bid. The Indian Railways is expected to earn around Rs1 million from the brand trains. No wonder Indian railways is making huge profits.
So coming days We would be traveling in Titan or MRF or even Kellogs who knows?
Kind Attention please,............. Train number 5386 , Chennai- Mumbai Nike express will start from Platform number 8
Just get in!!!!!
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