How things change. Seven years ago it was daggers drawn between Sainsbury’s and Coca-Cola over the launch of Classic Cola. Now Sainsbury’s is turning to its old rival to recruit innovation and marketing talent, such as Coke’s European innovation director Jeremy Schwartz who’s joining it as brand marketing director (MW last week).
Is this proof that retailers are at last recognising the true sources of marketing wisdom in packaged goods? Don’t you believe it.
With own-label products, retailers broke the mould – of marketing and branding. But with the new own-label ranges, such as Taste the Difference and Blue Parrot CafÃ©, they’re going even further. Sainsbury’s and Tesco may have stumbled onto own-label ranges in truly pragmatic fashion – as is their style – but they mark a seminal departure.
The best way to see their significance is to go back to that thrilling Coke/Classic Cola set-to of 1995, during which the retailer sub-brand temporarily grabbed two thirds in-store market share from the world’s greatest brand. Sainsbury’s move was presented as own label’s final triumphal onslaught on the last bastions of packaged goods branding. Behind the scenes, however, it was the product of intellectual capitulation to the very brands the retailer was supposed to be defeating: Sainsbury’s had accepted internally that the only and best way to build brands was to do it like the packaged goods big boys.
The clearest example of this intellectual capitulation is the fiasco of Indiana Gold. Advertised on television as an authentic American beer, Indiana Gold came with all the necessary imagery – massive petrol-guzzling cars with wings, pretty blondes and rock ‘n’ roll. The idea, explained then director of strategic marketing Anthony Rees, was “to sell a brand in true brand fashion”.
It was about building beer credibility, he argued. “We are competing with brands within that market. If you want to position yourself in the market then you have to act like a brand in the market. You have to ask yourself, what is the language of that market?”
In other words every key decision – competitive set, market positioning and language, and brand strategy – was being defined by, and in terms of, manufacturers’ product brands.
The new own-label ranges consign this theory to history. With them the retail marketing focus is clearly on consumers, not products. The main focus of competition is not within the supply chain – with each brand supplier fighting for market share and margin – but between retailers, for share of customer purse and loyalty.
It’s a complete mindset shift and the result is a “first ever” attempt to build a brand around the attributes of customers rather than products. A brand like Taste the Difference or Freefrom (with a focus on those with special dietary needs) is not about what’s different and special about the product per se. These types of brands focus on what a particular group of customers finds important and a range of products based on these customer attributes is then developed. It is, if you like, the first real move towards customer-centric, as opposed to product-centric, branding.
Customer-centric brand cuts across traditional product-focused brand and marketing considerations. A manufacturer with specialist assets and expertise in brewing is well-placed to innovate within the beer sector and build a strong beer brand. But no single manufacturer – even the likes of Procter & Gamble, Unilever or NestlÃ© with their vast product ranges – has the wherewithal to target a diverse range of products, spanning many categories, at a particular group of customers, as Blue Parrot CafÃ© does. Only retailers can do this. And by doing so, they are building brand propositions which, by definition, lie beyond any single manufacturer’s reach.
This represents a real strategic challenge for brand manufacturers. It was a big enough mental and organisational wrench for them to shift from narrow brand marketing to category management. Now, no sooner are they getting the hang of presenting themselves to retailers as category experts – building category sales in partnership with their retail customers – than they are being marginalised again.
What retailers are looking for now is not so much help in product category management, but consumer category management. How do they build their presence with families or with discrete groups such as young children, foodies, empty-nesters, single professionals, vegetarians? And it’s not clear what the role of any particular brand manufacturer with specialist expertise in say, carbonated beverages, coffee or yellow fats has in this quest.
But, what is clear is that the new ranges point to a completely new dimension of retail innovation – in format, product, service and marketing.
Creating the “better-for-you” child-focused Blue Parrot CafÃ© is just one obvious extension. Freefrom is crying out for new layers of service: specialist sources of helpful dietary, ingredient and cooking information, for instance. Mining rich loyalty-card data opens up new vistas of opportunity for better targeting and communications. The concept is pregnant with opportunity.
That doesn’t mean ranges are a panacea, however. Brand promises need attending to: can you always “taste the difference”? Fuzzy thinking can undermine the logic. Sainsbury’s “Protect and Perform” range fails to focus on a particular customer group. It’s an incoherent range, for ranging’s sake. Hazy brand architecture – an overall umbrella brand, a growing plethora of sub-branded ranges, plus good old-fashioned own label – could become a recipe for customer and marketing confusion. Co-ordinating the marketing department, buyers and agencies is a nightmare. Successfully differentiating the ranges as every retailer jumps on the bandwagon is a challenge.
But these are minor details. No doubt, that’s what attracted Schwartz. One of the things he was trying to do at Coca-Cola was to recast its approach to innovation: to build ideas, offers and initiatives “backwards” from particular customer groupings towards Coke’s products, rather than reaching out from its products to particular target markets. Arguably, such a philosophy fits much better at Sainsbury’s. The big questions now: which retailer can make the most of it? And how will manufacturers fit their brands into this picture?