Revitalising a brand

The other day whilst watching television, I spotted something I had not seen since I was a very young; an advertisement for Lyon’s Golden Syrup.

Lyon’s Golden Syrup is one of the United Kingdom’s oldest brands.  It has been on shop shelves almost from the beginning of modern retail dating back to the beginning of the 19th century.  It is a staple store cupboard product for both home and professional bakers.

In recent years, Lyon’s have not advertised their products on television.  They have relied upon prominent shelf position in supermarkets and advertising in specialist magazines.  As a very mature product line, the strategic marketing objective may be to hold onto the current market position of the product.  The strategic focus is to protect market share with the objective of encouraging brand loyalty.  promotion of the product should be to encourage repeat purchase and to maintain existing brand awareness.  This should be achieved for the lowest possible price.

So what has prompted the new television advertisements for Golden Syrup?

I have no firm facts regarding the new promotional strategy at Lyons but I can think of one possible reason.  In recent years, there has been a growth in the number of people baking at home.  This has been driven by television programmes such as The great British Bake Off.  Fans of that programme tend to be younger and more trendy than the traditional image of the home baker.

I suspect that, as a result of the show’s success, Lyons have seen an increase in sales of their baking products, in particular Golden Syrup and Treacle.

In recent weeks however, there has been a crisis at the heart of Bake Off.  The format has been purchased by Channel Four (for a huge amount of money).  The show has also lost three of its four regular hosts, the presenters Mel and Sue; and the judge Mary Berry.  it is a fact that Channel Four has much lower viewing figures than BBC1.

Given events, and the possibility that the chaos caused by the show’s station move, Lyons may believe the fad for home baking may be coming to an end.  The new television advertising campaign is a clear attempt to remind Lyon’s new trendier customer base that their products still exist and that baking is still fun.

In his book, The New Strategic Brand Management, J N Kapferer lists factors which are indicators that a brand’s equity is in decline.  These include:

  • A degradation of product quality – Pressure from lower cost competition forces a reduction in the quality of components.  There is an incentive to produce products at an equivalent cost to those competitors.  An example is Marks and Spencer’s who were known for high quality clothing at a reasonable price.  New firms such as Primark entered the UK market.  Their clothes were of a lower quality to those of M & S but at a far lower price.  Primark were happy with a high level of disposability in their products.  As a result, M & S cut prices and switched suppliers.  Consumers used to the high quality of M & S clothing were disappointed with the lower levels of quality in their products and sales fell.
  • Missing new trends – A tired brand may miss the changing expectations of their customers.  An example is the golf club manufacturer Taylor Made.  In the late 1980’s Taylor Made was America’s leading supplier of golf clubs.  However, they missed the trend of larger club head sizes, particularly for drivers.  Calloway introduced the Big Bertha driver and swept the market.  Taylor Made and other club manufacturers had to play catch up.
  • Mono-product syndrome – Brands may become associated with a single product – as is the case with Lyon’s and their Golden Syrup.  One such example is Wonderbra.  The Wonderbra was launched in Europe by Playtex in 1994.  Sales peaked in 1995 but since then they have collapsed dramatically.  The term Wonderbra became generic, describing a type of bra rather than a particular brand.  Competitors entered the padded bra market and traded off the generic name.  Playtex based its European marketing team in the UK.  It appeared that market research was based on UK consumers only.  Playtex failed to recognise changing fashions elsewhere in Europe.  European sales figures were increasingly dominated by the UK market.  UK sales became European sales.  The Wonderbra brand stayed strictly in the padded bra market and failed to move into other clothing/lingerie categories.
  • A faltering distribution chain – for example, cosmetics were traditionally sold in chemists and department stores.  This was the well used sales channel preferred by Vichy cosmetics.  Other cosmetics manufacturers developed lines specifically for sale in supermarkets.  Vichy ignored this change and their brand faltered.  Similarly, it was traditional for wines and spirits to be sold in specialist stores; off licences.  In the 1980’s supermarkets started to get liquor licences for off sales.  Several well-respected off licence chains went bust.
  • Increasing below-the-line investments – When a brand is struggling, many firms reduce the level of promotion and communication and turn to the use of in-store promotions to drive sales.  This reduces the brand’s share of voice and it withers.
  • Increased use of sub-brands – This can fragment a brand’s image as its identity can be lost in the multitude of options being offered to consumers.
  • Brand acquisition – Big groups can weaken the brands they purchase.  For example, it was incredibly difficult for L’Oréal to imbue The Body Shop brand with the same independent and authentic image imbued by its creator Anita Roddick.
    • Big conglomerates can impose more bureaucratic decision-making onto smaller brands which reduces creativity and adaptability to rapidly changing market conditions
    • Big conglomerates often lump purchased brands together to reduce overhead costs.  this is what happened when Martell bought the Seagram brand.  Martell moved the brand to its New York head office and placed Seagram in its spirits division.  The Seagram brand stalled.  Only when it was purchased by Pernod -Ricard and returned to its home in Cognac, France, did the Seagram brand begin to recover.  Moving to New York killed the brand’s individuality.
  • Brand dilution – Brands can become generic when the abandon communication on the specific nature of their products, e.g. Hoover, Jacuzzi, Lycra, Nylon.

Managing brands is about managing change.  If, for whatever reason, you stand still, your brand can stall as your market moves away from you.

Jobber and Jobber identified several strategies for reinvigorating brands.  I suspect this is the approach being taken by Lyon’s.  These are:

  • Product facelift – Modify the product but keep the rest of the marketing mix the same.  For example, changing the recipe of a food to imply improved quality.
  • Inconspicuous technological change – again no change to the mix but a change to the technology of the product; or its production; which is not obvious to the consumer
  • Remerchandising – no change to the product but a change to the way it is marketed (the approach taken by Lyon’s in relation to Golden syrup by changing its promotional channel mix)
  • Relaunch – Modify the product (as in product facelift) and remix its marketing
  • Conspicuous technological change – make a significant change to the technology of the product and make it the focus of changes in its marketing (e.g. The Calloway Big Bertha)
  • Intangible repositioning – The basic product remains the same but it is advertised to a new market segment (geographic or demographic)
  • Tangible repositioning – A modified product is marketed to a new market segment (geographic or demographic)
  • Neo-innovation – Fundamental changes to both the product and to the marketing strategy, e.g. Nokia moving from the paper industry into the manufacture of mobile phones.

The marketing of products and brands is a constantly changing and evolving managerial process.  Those brands and products which succeed long-term are willing to adapt to suit changing consumer expectations and market conditions.  Philmus Consulting can help your firm to identify strategies which assist this process.

The not so fantastic Dr Fox

A couple of blog entries ago, I discussed how many supporters of Brexit misunderstood the effect price has on market demand particularly in relation to the sale of luxury and prestige goods.  In that blog entry, I focused on the German car industry and how the likes of BMW do not see themselves in the same market as family car makers such as Fiat and Nissan.

I therefore sat agog listening to the speech made by the UK Secretary for International Trade, Doctor Liam Fox MP, on Britain’s future outside the EU.  Doctor Fox, in a rambling lecture, which covered topics such as the Corn Laws, 19th century engineering and the lack of free trade in North Korea, seemed to outline his preference for a ‘hard Brexit’ where Britain relied on WTO rules as the basis for trade.

Doctor Fox’s speech was also contradictory. He praised NAFTA, North America’s version of the EU. He also praised the EU’s trade agreement with South Korea; and its positive effect on the UK car industry; with seemingly little realisation that the UK leaving the EU would mean the UK car industries exclusion from that very agreement.

In truth, the speech was equivalent of that made by a first year economics student at a further education college and Dr Fox came across as pompous, egotistical,  out of his depth and, quite frankly deluded.  He seemed convinced that the UK could have a better free trade agreement with the EU from outside than it does as a member; an idea that is quite frankly bonkers!

So let’s imagine that Doctor Fox gets his way.  How does a business go about mitigating the cost increases applied to their products by the application of tariffs and the increased administrative cost of customs regulations?

Well, that is much easier for those companies selling luxury of prestige goods, such as champagne or executive cars than it is for those selling more utilitarian goods.

Firstly, they can alter their marketing strategy and their marketing mix to retain their position in the market.  As stated in my previous post, the market for luxury goods is likely to be more price inelastic than that of goods aimed at the mass market.  Some consumers in that market may actually see the higher cost of goods as a cache.  Luxury goods manufacturers can play on this promoting the exclusivity of their brand and how it plays into the self esteem needs of their target customers.

High end manufacturers can also offer their goods using a ‘more for more’ marketing strategy.  They can bundle other services and accessories into their product offer on the basis that consumers will pay a higher price but receive more for that price.  When you buy a Mercedes, a BMW or even a Volkswagen, you will often find that accessories which come as standard on other manufacturers are optional extras.  They could bundle in services such as valeting or servicing into the price.  The secret of a good ‘more for more’ strategy is to identify additional features and services which are of value to your target customers but which can be provided at a cost which has a marginal effect on your profit margins.  Ideally, cost neutral services can be bundled into the product.

Firms can alter their product mix to give a more prominent position to those which are least effected by the tariff.  For example, BMW may decide that it wants to offer fewer one series vehicles to the UK than five or seven series models.

Finally, larger manufacturers can use their market power to renegotiate their relationship with their suppliers, reducing the unit price of components whilst retaining the market price, offsetting increased tariff cost and avoiding price increases at the point of sale.

Of course, some of these strategies are available to those operating in the mass market but they may find them harder to implement or they may have a larger effect on margins.

The response to Doctor Fox’s speech from the car industry has been interesting.  Shortly after the speech Nissan announced they were holding off on the decision as to where new models of their cars are to be produced until after the Brexit negotiations are completed.  The implication is that models may be moved away from Nissan’s Sunderland plant if WTO tariff’s are applied.  In short, there would be a phased withdrawal from UK production.

The following day, Jaguar Land Rover announced that it was reviewing its position as its research in Europe showed a reluctance from consumers to buy British vehicles.

Let’s hope there was wiser and cooler heads in government than that of Doctor Fox, or British trade could be in peril.

 

 

Do You Know Who Your Customers Are?

My brother runs a landscape gardening firm. I was talking to him about his customer base and asked him who his target customers were.  He responded that his customer base was “anyone and everyone”.

This response took me aback.  I was astonished that, for a business that relied significantly on word of mouth for its survival, my brother’s firm had so little knowledge of  the differing customer groups in the market.

My brother’s company may well trade with the market as a whole but it was clear that some of its customers would be of more value to the firm than others.

It is also true that the needs and expectations of consumers vary.  Rather than having a single promotional offer, my brother’s firm should be adapting its marketing mix so that it aligned with the expectations of different customer groups.

I explained the to my brother using the example of a large breakfast cereal manufacturer.  This was a firm, unlike my brother’s which could truly describe itself as trading with “everyone and anyone” but they do not offer a single product to market or promote all their products in the same way.  They sell low-fat cereals to those wishing to lose weight and advertise them through health and women’s magazines.  They advertise chocolate covered cereals using cartoon characters and on television when children are watching.  They produce basic cereals at a low price and distribute them through discount stores. In short, they split their market into different segments and adjust their marketing mix to meet the expectations of those segments.

In his book Market Segmentation, Professor Malcolm Macdonald uses the example of farmers buying chemical fertiliser.  He identifies seven different market segments in the agricultural fertiliser customer base.  Here are three of his market segments.

Firstly there are those farmers who are price sensitive.  These farmers will always look for the cheapest option.  Professor Macdonald estimates that this group makes up about 7% of the market.

Another group is the technological farmer.  This group of farmer are interested in using technology to ensure that the best yields are achieved.  These farmers will use satellite technology to identify the soil types on their farm and will use GPS to ensure that the correct mix of nutrients are applied in different areas of a field.

A third group is the farmer who wants to ensure that his farm is the best looking and smartest around.  In fact, our family knows such a farmer.  His farmyard is spotless, his farm equipment gleams and his field boundaries are neatly trimmed.  Woe betide any weed which dare grow in his fields.  This type of farmer will buy agrichemicals which promise the best crop appearance not price or yield.

A firm operating in the agrichemical market may not get anywhere trying to push a product to the latter two segments on the basis of price alone.  Equally, they may get nowhere trying to sell expensive fertiliser to the first group of farmers and telling them that it will make their fields look nice.

Market segmentation and adjusting your marketing mix to match your key customer’s needs is a crucial skill in developing a successful business.  Philmus Consulting Ltd can help your firm to carry out this process and ensure that your promotional activity meets the differing needs and wants of your consumers.