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Small Is Beautiful For Brands


Small Is Beautiful For Brands

It’s a big deal when a new chief executive takes the helm. All eyes, therefore, were on Fabrizio Freda at Reuters Global Luxury Summit in New York last week. Freda is about to become the head of Estée Lauder, and he took the stage to outline the future direction of the huge cosmetics group, which includes brands such as Clinique, M.A.C. and Crème de la Mer.

His big message? Smallness. Estée Lauder’s market data suggests that consumers are opting in ever greater numbers for smaller SKUs – even when bigger formats offer significantly better value for money. Freda says he is planning smaller formats of fragrances and cosmetics, with lower entry price points and, hopefully, better sales.

Freda wasn’t the only soon-to-be chief executive preaching the gospel of minimization last week. Bob McDonald, who steps up to the helm of Procter & Gamble on 1 July, says his focus will be on global expansion and the ability of P&G to adjust its range to meet the needs of consumers in emerging markets.

McDonald cited Pantene, one of the brands he oversaw in India while head of haircare, as a prime illustration of the future direction for P&G. Pantene is sold in mini-sachets in India, as many consumers cannot afford bigger formats and prefer smaller, single purchases. Smallness triumphs because it fits the needs of emerging markets better.

At the other end of the pricing spectrum, smallness is proving key for several of the world’s luxury brands. Bain & Company’s 2012 Luxury Market Update suggests that leather goods brands such as Louis Vuitton, Gucci and Hermès will return to prosperity faster than ‘pure’ fashion brands such as Christian Lacroix or Valentino.

The reason for their superior resilience is not related to leather itself, but rather the preponderance of smaller accessories that typically make up part of the offer of leather goods brands. In cash-strapped London or New York, smaller accessories allow fashion mavens to enjoy participating in luxury without the big bills to match.

For the growing army of luxury fans in the BRIC economies, these smaller accessories are providing an accessible introduction to European brands. In luxury, it seems, smallness works across both the traditional old-world markets and the white-hot new world.

The trend for miniaturization is also at the heart of one of the biggest shifts in British consumer behavior as well. According to a Mintel report published last week, British wine consumption is declining for the first time in more than a decade. Meanwhile, vodka drinking in the UK has risen 40% over the past two years.

The reason? Commentators have offered a range of explanations, from superior marketing to demographic changes, none of which rings true. How about a more basic explanation? When faced with the choice of a bottle of wine or a shot of vodka, today’s consumer is likely to choose the smaller option.

Today’s brands can win big by thinking small. Smaller perfume bottles; smaller servings of shampoo; smaller accessories; smaller drinks.

In honor of this trend in branding, I am going to end this post a little differently. Rather than my usual 620 words, I offer you 10% less. Instead of a bracing conclusion, I am going to leave you with a paragraph of fresh air. Because… well… you get it.

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Tamsen McMahon (@tamadear) on June 17th, 2009 said

It will be interesting to see how a trend towards smallness will stand up against the trends towards all things green.

Small packaging=more packaging overall.

But I think what you’re really getting at is things that are small *in concept,* which then relates to Long Tail niches. When individuality dominates, mass–or massive–anything loses appeal.

Bhavana Jaiswal on June 18th, 2009 said

The rural markets of India are learning grounds for many multinational brands today. Unilever pioneered the concept of sachets in the rural markets, because they discovered that while these markets have immense potential, they prefer to buy products in small quantities as and when needed. Today, almost every other brand in India follows the same concept.

It’s heartwarming to know that this concept is now being recognized and embraced on a global stage.

Olga Slavkina on June 18th, 2009 said

This is a very interesting trend. I have posted some commentary on my blog as a response to you. If you discover some more underlying reasons for this “mini-trend”, please keep me posted!


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