Branding Strategy Insider

Heinz Private Label Strategy Proves Masterful

David Jason's voice wafts into British living rooms as images of everyday life fill the screen. 'Some things in life just have to be,' he intones. It's not meant to be prize-winning creative work. It's the latest part of Heinz's increasingly successful strategy to fight private labels. The food giant offers a playbook on how to survive and prosper in an age of own-label brands.

First you must focus. Heinz might be famous for its '57 varieties', but that was a portfolio for a long-lost age, when stores sold your brands, rather than competed via offerings of their own. Today, Heinz manages a tight global portfolio in which 15 brands account for 70% of sales. In the UK, that portfolio includes the Lea & Perrins and Weight Watchers ranges. Like the rest of the Heinz stable, these brands have been selected on three criteria: strong brand equity, top two in terms of market share and operating in categories in which private label is relatively weak. Former cash cows such as Linda McCartney's range and StarKist tuna, which failed these tests, have been jettisoned.

The resulting slender portfolio allows Heinz to focus marketing and research and development resources on the brands with the most profit potential. The strategy hinges on Heinz being able to build and maintain equity in these brands. The 'It Has to Be Heinz' campaign is designed to do that by making Heinz products as familiar and trusted as Jason's mellifluous voiceover - and it's working. Heinz Tomato Ketchup consistently appears as the brand that British consumers least want to give up, followed by Heinz Beanz. Despite attacks from Tesco's various ketchups, a rejuvenated Sainsbury's version and Aldi's deep-discounted sauce, Heinz still has a 75% share of the category. Nobody has that kind of share anymore - especially when the product costs up to four times more than own-label rivals.

The Danger of You Centered Branding

When I was at university, I used to have this terrifically easy-going girlfriend. If I wanted to go out with my college mates for a keg party, she was fine with it. If I wanted to stay in, eat pizza and watch Match of the Day - she'd smile and agree. It got to the stage where she stopped suggesting things and just went along with whatever I wanted to do.

I often think about her - especially when my wife is telling me to take out the trash. Or changing the channel when I am in the middle of watching Mad Men because Hell's Kitchen is on.

Don't get me wrong. I don't yearn for my former girlfriend - quite the opposite. I remember how bored I was in that relationship and how horribly I behaved. The more pliant my girlfriend, the more lazy and distant I became.

This fact should worry Vodafone, Yahoo! and T-Mobile, because all three brands have repositioned themselves around being whatever you want them to be. Vodafone is spending millions declaring 'Power to you'. Yahoo! is proclaiming: 'There is a new master of the digital universe. You'.

Meanwhile, T-Mobile is launching its myTouch smart-phone by asking consumers to imagine a 'one-of-a-kind phone for your one-of-a-kind life'.

'We are about you,' say these brands. 'Whatever you want, that's what we are.' It's very 'co-creative', 'empowering' and all the other things 22-year-old marketers crap on about.

6 Required Skills To Be A Great Marketer

 
Let's start with a basic but key criterion. Marketers have to be comfortable spending time with and listening to consumers. A significant proportion of marketers cannot find the time or the humility to spend time in the market. They are happy briefing research agencies and reviewing the results, but miss the fundamental starting point for any great marketer: get out of your office and spend time in the places and spaces where your consumers experience the product, no matter how senior or 'important' you consider yourself.

Next, behavioural segmentation. Too many marketers think segments are people who have similar demographic characteristics. Rubbish. Segments are groups of consumers who want the same things - the fact that they might share an age range, gender or postcode is relevant only after we first use our market research to show specific clusters of shared needs. Segments built from survey data, with good behavioural names and a tight portrait to capture their identity, is a hallmark of a good marketer. The usual '18-35 male' crap indicates the opposite. 

Then comes targeting. A good marketer has made the leap of faith and accepted that fewer target consumers will deliver a better overall result. Usually, that means stepping back from the segmentation and only going after 10% or 20% of the potential market. Tight target segments mean the marketing has a chance to succeed. Too many marketers lose faith at this stage and end up targeting pretty much everyone.

Manufacturers Losing Power To Retailers

You might have felt a slight rumble under your feet last November, and heard the faint but unmistakable sound of an unstoppable object coming into contact with an immovable force.

In the US, the epicentre of the collision, the noise must have been deafening. In a marketing version of Godzilla versus King Kong, bulk retailer Costco and Coca-Cola went to war.

For weeks, the two had been negotiating a new supply contract. Then in November, the talks broke down and Costco, the third-biggest retailer in the US, released a terse statement: 'At this time, Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve.' This means that Costco will no longer stock Coke, Sprite, Fanta, Powerade or Dasani until the matter is resolved.

Although it is impossible to be sure what took place behind closed doors, it is likely that the two parties approached the pricing discussion with conflicting outcomes in mind.

In the US, Coca-Cola is trying to increase prices to offset the gradual decline in volume sales, so it's possible it tried to ask for more money.

For Costco, facing stiff competition from other big discount players such as Sam's Club and Trader Joe's, the emphasis would have been on Coke dropping its prices. With Costco's profit margins already nerve-shreddingly thin at 3%, a price cut is the only way to ensure it can undercut its competitors. The two corporate behemoths were set on a collision course and the wait was on to see who would blink first.

Senseless Marketers: Breaking The UnBroken

Marketers really are morons. While workers in other disciplines build their knowledge base carefully over decades, our industry seems intent on destroying its most fundamental concept in an attempt to replace it with something new.

Take Forrester, the US research giant, and its latest thought piece: 'Adaptive Brand Marketing: Rethinking Your Approach in the Digital Age'. In my opinion, it's a disgraceful publication. It's not that I disagree with many of the points made in the piece; it's the way it recommends the wanton obliteration of some of the central concepts of marketing as a purportedly sensible response to the challenges of digital marketing.

According to the report, the term 'brand managers' should be replaced with 'brand advocates'. What a load of unhelpful bollocks. We have spent 70 years establishing the term 'brand manager' as a commonly accepted and respected function within many organisations. Just as we get there, Forrester wants to knock it all down and replace it with a fluffier, camper alternative.

Imagine if chartered accountants suddenly decided to rename themselves 'personal levy advisers' or firemen rebranded themselves as 'incendiary technicians'. You'd expect an outcry from embarrassed professionals keen to hold onto their identity.

Not so from marketers. Advertising Age actually supported Forrester's suggestion, with an article entitled 'Why it's time to do away with the brand manager'.

Forrester wasn't finished there. Its report also suggested changing the four Ps from product, price, place and promotion to 'permission, proximity, perception and participation'. Can I add a fifth? Pointless.

Toyota's Brand Problems Begin At Its Core

Recently Toyota's Japanese president, Akio Toyoda, faced a US-style dressing down when he appeared before a Congressional hearing in Washington DC.

However, irrespective of how well Toyoda answered his critics, and even if all Toyota's design flaws are remedied, its problems are only beginning.

Once one of its main advantages, Toyota's brand architecture is about to become its biggest strategic problem. Like many other Japanese companies, Toyota has built its business from an almost exclusive focus on a single corporate brand. It also markets Lexus and Scion, but most of the company's sales are derived from Toyota sub-brands.

That concentrated approach has distinct benefits. It fostered the single, united culture that was so important to Toyota's success. It also allowed the company to pump all its marketing investment into the Toyota master-brand rather than its sub-brands for greater marketing efficiency.

How Brands Should Appeal To Women

In my work as a cognitive anthropologist I study how the mind works, how people "make meaning," how people form attachments to things (brands), and how people make decisions. Decisions like how to select what to invest in, whether stocks or mates; why and under what conditions, people prefer Coke over Pepsi (or vice versa), Charmin over Cottonelle; why a person believes in one God over another.

In that search I have inadvertently uncovered something about viva la difference: WOMEN CYCLE, MEN CONSUMMATE.

Marketers need to understand the implications of this difference.

The male is oriented to the present, the concrete, the visual, the "hit," the win, the "me." Evolutionarily speaking, the male must bring home the bacon. No Dilly-Dallying. No excuses. The male is in the now and, above all else, is a pragmatist.

The female is oriented the conceptual, to underlying dynamics, to the relationship between things, and to stability over the long-term. The female understands and sees patterns over time.

Seven Critical Factors Of Brand Strategy Success

 
The following seven factors continue to rule the day for building leading brands: 

Organization Support

•CEO leadership & support

•Distinctive corporate culture that supports brand promise

•Ability to obtain support from a broad spectrum of employees

•Alignment of brand messages across functions

Brand Presentation

•Strength of brand identity system

•Effective use of visuals/imagery

•Ability to capture the brand in a slogan

Source: The Conference Board’s 1998 “Managing the Corporate Brand” study

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