Power brands begin to stretch credibility

Unilever’s axing of Domestos’ extension products has put the concept of ‘power brands’ under the spotlight. Is the pressure for innovation forcing marketers into ill-judged brand-extension programmes? Sonoo Singh reports

Two years ago when Unilever chief executive Niall FitzGerald announced the Path to Growth strategy, which involved throwing overboard non-core interests and concentrating on its key global products, the buzzword was “power branding”. But Unilever’s power branding strategy – building multi-product, multi-category brands with a global reach – appears to be experiencing a few hiccups.

Domestos, one of the company’s 400 power brands, has been stretched to incorporate various cleaning products, such as toilet mousse and wipes. But after two years of frenzied activity, the Domestos brand is being pruned back to its roots as a toilet-cleaning bleach (MW last week).

In what is being seen as a major U-turn, the all-purpose Domestos brand extensions are to be axed, with some product lines being merged into the Cif brand.

Managing director of branding company FutureBrand, Chris Nurko, says: “Marketers think that because a brand is successful it can be developed as a power brand and span various categories. But every brand has an emotional territory and only when consumers allow a brand to be extended into a diverse range of products can it be a power brand.”

One brand consumers have allowed this to happen to is Dove, a skincare brand that was extended into the haircare market earlier this year. Nurko says: “Dove is all about being soft and gentle – brand propositions which can easily be exploited in both skincare and haircare product categories.”

Mark Lynch, a consumer products analyst at Goldman Sachs, agrees: “To consumers, Domestos will always be an abrasive bleach, which is not a good starting point to sell products such as surface cleaning wipes. As a result, Domestos was unable to claim the all-purpose cleaning category. But, a brand like Dove can claim the ‘one-fourth moisturising category’ heritage in both haircare and skincare.”

Apart from misinterpreting what the Domestos brand stands for in the eyes of consumers, Unilever also appears to have misjudged the degree of competition in the cleaning market. Retailers claim the Domestos brand extensions came across as “me-too” products and had no chance of competing against the host of similar products already cluttering the shelves. One industry insider says: “Unilever blurred the lines between what Domestos stands for and what Cif stands for, leading to confusion in customers’ minds over the relative merits of the two brands and their brand extensions.”

Lever Fabergé, the UK subsidiary of Unilever responsible for Domestos, refuses to comment on plans for the brand. But he says: “Our aim for the Domestos and Cif brands in 2003 will be to maintain a strong presence in the home and to ensure that consumer needs are met. As well as launching products and marketing activity, we will constantly monitor our brands and their performance so they stay aligned with consumer demand. With changing consumer trends, both Domestos and Cif will adapt to maintain their strength within the household-cleaning market.”

According to Goldman Sach’s Lynch, the phenomenon of power branding has been spurred on by the increasing power of retailers and the need to compete with their cheaper own-label brands. When too many identical products exist in the market, consumers tend to gravitate towards own-label brands, which are essentially economy products.

An increasing number of retailers are not only developing strong own-label ranges, but are also tending to stock only the leading brands in a category. It is this battle for shelf space in stores that is leading to product portfolios being streamlined.

The fight for shelf space is also understood to be behind Unilever’s decision to cull its Organics haircare lines. It is believed that the existing 30 Organics variants will be cut to 15 next year. By streamlining the Organics range, it is thought, the way is being made for a new global haircare brand, launching in April. It is rumoured to be Sunsilk, a brand that was axed in the UK more than ten years ago.

But it is not only Unilever which has clocked up a few failures in its power branding strategy. Last year, arch rival Procter & Gamble axed its Oil of Olay branded cosmetics range because of poor performance. The skincare brand was extended into cosmetics in 1999 with an estimated $99m (£62m) marketing and advertising budget, following five years of test marketing. P&G has also tried to launch Dryel, a home dry-cleaning product, into various markets as a power brand. But after the product was tested in Ireland for two years, a decision was made to halt the roll out (MW June 21, 2001).

Peter Shaw, a marketing consultant at Corporate Edge, says: “Oil of Olay cosmetics could never have worked because the mother brand has an intimacy about it that cannot be transferred to a cosmetics range, which is all about being overt and looking good from the outside. Only if the brand extensions have some resonance with the mother brand can vast product ranges survive.”

Other examples where manufacturers have failed to boost share and profit levels through power branding strategies include Xerox. Known as a photocopier manufacturer, the company had to write off millions of pounds when it unsuccessfully tried to extend into computers more than two years ago. In the drinks sector, Bulmers made a blunder when it launched Strongbow Smooth, a creamy cider product. Value Engineers chairman Paul Walton says: “Cider and creamy beers are two different categories and customers did not accept the mismatch between the traditional cider brand and the new creamy texture.”

According to Lynch, because the rate of innovation is on the increase, the risks taken and the failures clocked up by manufacturers will also inflate. “Celebrating failure is now a part of the innovation culture,” he adds.

On this premise it will not be long before other brand extensions disappear from the shelves. The market is already placing its bets on Coca-Cola’s Diet Coke with Lemon variant and P&G’s Swiffer brand.