The pitfalls of megabranding.

August 1, 2008

Last week I went to my local supermarket for Pillsbury’s Best all-purpose flour, a brand I have been buying for years.

No luck. The store had Pillsbury’s Best bread flour, whole wheat f ]]>

So I bought Gold Medal all-purpose flour instead.

The week before I went to the same supermarket for Minute Maid lemonade, not exactly an exotic drink.

No luck. The store had Minute Maid berry punch, citrus punch, fruit punch, tropical punch, limeade, ice tea and pink lemonade. They just didn’t have the original Minute Maid lemonade.

What’s the similarity between Pillsbury’s Best all-purpose flour and Minute Maid lemonade? They ]]>

The rampant proliferation of flavor variations has a downside. Because each variation tends to have its own facing on a supermarket shelf, the first variation to go “out of stock” is inevitably the most popular one. Which annoys the largest number of consumers.

Few people are going to notice if Minute Maid citrus punch is out of stock, but many people are going to notice if Minute Maid lemonade is out of stock.

Too many marketing people have read Chris Anderson’s book, The Long Tail, and are applying his theory to consumer package goods. But I maintain that there’s a big difference between an Internet store (which can have an almost unlimited selection) and a retail store (which needs to be focused on only the most popular items.)

If a book store tried to stock everything that stocks, it would have one copy each of a million books that few people want to buy and no copies each of the thousands of popular books that everybody wants to buy.

Not a big problem, you might be thinking? Look at some of the statistics.

• Tostitos now come in 11 different flavors, including the latest, Tostitos with lime. Not to mention the six flavors of Tostitos salsa.
• Wheat Thins now come in 11 different flavors including such weirdoes as Parmesan Basil.
• Gatorade now comes in 23 different flavors and varieties.
• Grey Poupon now comes in 7 different varieties including Harvest Course Ground.
• Airborne now comes in 9 different varieties including Pink Grapefruit.
• Edge shaving gel now comes in 13 different varieties some of which have exceedingly long names like Edge Active Care Shave Gel Natural Cool, with Eucalyptus.
• V8 now comes in 9 different flavors, including V-Fusion (3 flavors) which is a mixture of vegetable and fruit juice and Splash which is all fruit juice. I should also mention that Campbell has just introduced V8 soup in five flavors.
• Goldfish crackers now come 16 different flavors including such odd combinations as “Pretzel Goldfish” and “Blazin’ Buffalo Wing Flavor Blasted Goldfish.” Those are just the flavors, of course. Goldfish crackers also come in bags, boxes, cartons, multi-packs and 100-calorie pouches.
Five years ago, a typical Coca-Cola bottler handled 200 SKUs. Today that same bottler has more than 530 SKUs. And is facing the addition of more than 65 new SKUs a year.

Consumers are getting confused. A number of research studies have shown that the more choices a consumer has, the more likely that consumer will be unhappy with the choice he or she does make.

(The only people who are getting excited about the proliferation of product flavors and variations are the vice presidents in charge of slotting fees.)

Kellogg now has 50 types of breakfast cereal, yet the consumption of breakfast cereal has been declining. Actually there’s a correlation between the two. When business is declining, companies tend to respond by introducing new flavors.

Take the beer business. In spite of a raft of new brands and new flavors (Bud Light Lime, for example) the per-capita consumption of beer has been declining.

Cigarettes have followed this same pattern. Years ago, a cigarette machine held six brands which represented the vast majority of the market. Today, Marlboro alone comes in more than a dozen variations.

Coca-Cola now comes in 14 different flavors, but in the last few years the per-capita consumption of cola has been slowly declining.

A declining category means that consumers are leaving the market. Some consumers who used to drink cola are now drinking water and other beverages. How can “more choice” bring them back to cola? What Coca-Cola needs to do is to promote “cola,” not choice.

An innovative new product gets turned into a megabrand in a series of stages which can take decades.

Stage 1: A company introduces a new brand that pioneers a new category. The brand stands for something specific and becomes red hot. Gatorade in sports drinks. V8 in vegetable juice. Red Bull in energy drinks.

Stage 2: No category can keep expanding forever. At some point in time, sales level off, so companies figure they need to do something to accelerate their growth so they introduce line extensions. Gatorade energy bars, V8 Splash, Red Bull cola.

Stage 3: After awhile, the numerous line extensions have undermined what the brand stands for. So the company decides to turn the extensions into brands and the brand into a “megabrand.”

Kellogg is in the process of turning a cereal brand, Special K, into a megabrand with Special K snack bites, waffles, protein bars and protein waters.

Procter & Gamble took Oil of Olay and extended the brand into moisturizers, cleansers and cosmetics, eventually changing the name to Olay and turning it into a megabrand.

And following the Olay pattern, Procter & Gamble is also in the process of turning Gillette into a megabrand with razors, blades, pre-shave, post-shave, deodorants, face & body wash and hair care products, all marketed under the Gillette megabrand name.

This is a massive program. There are 6 Gillette shampoos and 12 Gillette deodorants, for example. (I can’t see myself using anything called “Gillette” under my armpits. To cut hair maybe, but not to deodorize.)

But then again, the whole idea of a megabrand is to strip the brand name of any actual meaning and turn it into a Paris Hilton. Famous for being famous.

Will it work? Maybe. Marketing is never one sided. Winners are usually those companies whose strategies are better than the strategies of their competitors.

Whom does Olay compete with? L’Oréal, Maybelline, Revlon, CoverGirl, etc. In other words, other megabrands. Procter & Gamble has been winning, in my opinion, not because of a better branding strategy, but because of a better product strategy. P&G’s research & development people have been turning out a large number of significant product improvements like “Regenerist eye derma-pod,” a new anti-aging treatment for the eyes.

What megabranders should worry about is the potential threat of narrowly-focused competitors.

Take the U.S. automotive industry. Over the years, the three major brands have slowly turned themselves into megabrands. Advertising campaigns tended to focus on models, not brands. For example, the launch of Chevrolet’s new Malibu.

So the models became the brands and the brands (Chevrolet, Ford and Dodge) became the megabrands, essentially brands without any meaning.

Unfortunately for Detroit, narrowly-focused competitors have emerged.

• Toyota means “reliability.”
• BMW means “driving.”
• Lexus means “luxury.”
• Mercedes-Benz means “prestige.
• Hyundai means “cheap.” Today, the three U.S. automobile manufacturers are in deep trouble. General Motors was once the largest company in the world. GM once made more money than any other company in the world.

No longer. General Motors lost $15.5 billion in the second quarter of this year.

Last month, Merrill Lynch said a General Motors bankruptcy is possible, which motivated CEO Rick Wagoner to say that GM has “no thoughts whatsoever” of bankruptcy. (Up until the last moment, Bear Stearns executives continued to deny their company was in financial trouble.) 

Also going downhill fast is Chrysler. The company’s latest move is to encourage the merger of Chrysler, Dodge and Jeep dealerships into local “megabrand” dealerships.

When you drive down automotive row, you see big signs that say: “Toyota, Honda, Ford, Chevrolet, BMW, Volvo, etc.” When you come to a Chrysler megabrand dealership, what is the sign going to say?

The sign is going to say: “Chrysler. Dodge. Jeep.” Three names in small type and three different logotypes, all of which are going to be easy to miss.

Now what do you suppose Chrysler will do next? They’re likely to decide to rip out those “three brand” signs and replace them with big, new signs that just say “Chrysler.” And another megabrand is born. A name with no actual meaning.

Ford is apparently thinking along similar lines. Just this week, Advertising Age reported that Ford is combining its Lincoln Mercury sales and marketing staff with the rest of the Ford division. And here’s the most significant part of the story: The company will align its staff by product type rather than by brand. Sounds like the next step is to turn Ford into a “super megabrand.” (Ford is already a plain megabrand.)

In my opinion, turning a brand into a megabrand also turns the brand into mush. It may continue to be successful, but only if the megabrand’s competitors follow similar strategies.

Look what Steve Jobs did when he took over Apple. At the time, Apple marketed some 40 different products, from inkjet printers to the Newton handheld.

On the computer side of Apple’s business, there were four major lines (Quadras, Power Macs, Performas and PowerBooks) each with a dozen different models, a typical megabrand product lineup.

Jobs cut the product line down to four machines: two laptops and two desktops. Later he told BusinessWeek, “Everything just got simpler. That’s been one of my mantras – focus and simplicity.”

Over the past few years, Apple has doubled its share of the computer market.

Walk down the coffee aisle in any supermarket and notice the profusion of brands and flavors. Folgers alone has 29 different varieties.

Then there’s Illycaffè, the makers of the Illy brand which has become the world’s largest-selling espresso. Unlike any other coffee company in the world, Illycaffè makes only one espresso blend (and a decafe version of the same blend.)

The company imports 100 percent Arabica beans from 13 different countries around the world. The company’s coffee experts in Trieste, Italy, then decide how much of each coffee type should be blended into the final Illy product.

A brand with a message will always outsell a meaningless megabrand.