Is the mass market at the end of its line?

Although the modern brand mantra is ‘niche’, the likes of M&S and Camelot are confident that mass-market names still have a place.

Reports of the decline of mass-market brands abound. The woes of Marks & Spencer have been well-documented, and the chain has attempted to reinforce its mass-market values with the tautologous slogan “exclusively for everyone”.

Last week, Camelot results showed consumers are losing interest in the jackpot-producing National Lottery draw, while sales of its more segmented scratchcard business increased by nearly seven per cent. And ITV – “the archetypal mass-market medium” – is facing a steady slide in the face of a reinvigorated BBC and the growth of niche satellite and cable channels.

It has long been predicted that niche brands and one-to-one communications would replace the lumbering mass-market brands from a bygone, homogenised era. Society would fragment and brands would target ever more select groups. In the Eighties, designer labels and “lifestyle” products were confidently expected to trounce the brands that had been built up since the Fifties. The belief was that factories and major retailers established early last century are inflexible and unsuited to the individuality of modern markets.

Interbrand deputy chairman Tom Blackett points to Tesco as an example of a mass marketer that has managed to keep its offer fresh through constant innovation. However, its legal defeat two weeks ago in the battle to sell cut-price Levi’s jeans sourced from outside the European Union appears to emphasise the limits – the legal ones at least – to invading the labels’ niche territory.

Blackett says niche brands tend to work at the younger end of the age spectrum, while mass-market brands tend to be aimed at people aged between 25 and 50.

“What seems to happen is that as people become older, though the niches are still there, the people move on and look more to the mass market. As people are living longer and retiring earlier, we are seeing niche opportunities opening up at the older end of the spectrum, and you have niches overlain on top of the mass market.”

According to Martin Hayward of the Henley Centre, there is a limit to how far niche brands can go before they swamp consumers with too much choice. “In the US there are a growing number of television stations. People watch more television if they have up to 40 channels. But after 40, they start watching less. There is a point at which there is too much choice in a market,” he says.

And do people really want all the choice that is on offer? Peter Shaw, a director of brand consultants Corporate Edge, says that when Next launched in the Eighties it promised individualised styles for everybody. But in reality, most people chose similar suits and ended up dressing the same. And he adds: “Starbucks has got a choice of 20 different types of coffee. But I am sure that 90 per cent of what it sells is capuccino. How many people really buy all that stuff?”

But, he says, the real problem for the likes of M&S, ITV and the National Lottery is that they have become boring. By trying to be exclusively for everyone, they have ended up pleasing no one.

One of the greatest boons that mass-market brands have in their favour is the reluctance of consumers to go out and seek an alternative. High street banks have managed to hold on to the majority of their customers simply because they can’t be bothered to go through the inconvenience of changing accounts, or suffer the interminable worldwide waiting game involved in online banking. British Gas has held on to three-quarters of its customers in the deregulated energy market because most energy users are not roused to change suppliers, given the wafer-thin savings that are on offer. Barclaycard still has some 7 million customers, even though aggressive credit card rivals are offering zero per cent interest introductory offers and cheaper long-term repayments.

But however slowly these established players lose their customers, they are still facing a long-term decline and it is the new, flexible operators that are in the ascendant.

Some argue that old mass-market brands are being replaced by discount operators – whether Matalan or easyJet – because there is no longer any shame in buying things on the cheap. Gary Duckworth, chairman of ad agency DFGW, says: “It’s become acceptable to be middle class and go for cheap prices, it has become more mainstream to buy into brands with a clear low price positioning.”

But Duckworth still sees a future for mass-market operators, as long as they manage to innovate and he, too, gives the example of Tesco, along with Renault. He says it is the ability of managers to work within these social trends rather than the trends themselves that determine the success of mass-market brands. In reality, businesses such as Tesco have succeeded because they have catered to many market sectors and are able to defend themselves against niche products.

But whether this approach will save the likes of M&S, Camelot and ITV is questionable. By next year, when the success of strategies for all three brands are clearer, it will become apparent whether they are stuck in an evolutionary dead-end, or can transform themselves in line with the new environment.