Reports from the frontline of grocery marketing are far from encouraging. The combined onslaught of supermarket own labels and discounters’ value brands is cutting down FMCG (fast moving consumer goods) rivals.
But the troops at Unilever, Procter & Gamble, Premier Foods, Cadbury and all the other allied forces of FMCG marketing need to hold their nerve and get ready to go on the offensive.
One positive perspective is that shoppers will flock back to the comfort of tried, tested and advertised brand names as an act of escapism from the crisis. They’ll pay a few pennies more for a branded product from the money saved on holidays, furniture, cars and other big ticket items foresaken during the downturn. There is reassurance in buying a brand name that formed part of your childhood. Its maternal, nurturing properties offer security to consumers in times of uncertainty and instability.
But retailers are doing all they can to undermine the consolations of brands. Sainsbury’s has run its in-store “switch and save” campaign targeting products such as Heinz Tomato Ketchup and Fairy Liquid with point-of-sale advertising pointing out that the retailer’s own label version is cheaper. This is designed to induce shopper guilt about paying over the odds for brands and to direct consumers to Sainsbury’s Basics range.
The accumulated value of advertising and marketing that has gone into building up brand equity over decades is becoming apparent. For the moment, it seems to count for very little as own labels are winning the battle.
But it is perhaps worth remembering similar fears during the downturn of the early 90s. It was assumed FMCG brands would be wiped out by supermarket own labels.
On April 2nd 1993, Philip Morris, now renamed Altria, stunned the market in the United States by announcing a 20% price cut on Marlboro cigarettes. This was in response to the rise of bargain brands which were eating into Marlboro’s market share. Manufacturers of premium cigarettes had hiked prices to make up for falling volumes. Bargain brands moved in to snatch the lower-priced end of the market. In the long term, Marlboro’s fightback appeared to work and it regained market share from the own label brands.
At the time, however, it looked like marketing and advertising had reached the ends of their interwoven lives. If the Marlboro man – who had been the ultimate icon of US advertising since 1954 – was no longer sufficient to keep smokers from drifting to low-cost, unbranded rivals, surely the marketing era was over? Following the price-cutting announcement, Philip Morris shed $10bn of its stock market value and other branded goods manufacturers that relied on advertising – Coca-Cola, Procter & Gamble, Disney and others also saw their share prices slashed.
Many believed brands were dead. From then on, the role of marketers would be to pit their products against supermarket own labels and bargain brands and battle it out on price.
As we now know, the future panned out rather differently. The 90s and early 2000s produced and promoted some of the most successful brands ever created. Nike, Starbucks and Apple all grew to undreamt of heights over that time. Packaged grocery brands thrived too, with snack food brands in particular achieving massive growth and stature.
For the long-lasting effect of Marlboro Friday was to remind marketers that there is more to their trade than simply flogging quality products with a nice ad campaign. The brand has to serve a wider purpose in people’s lives, become part of a lifestyle, take on a meaning and role greater than its use. This could be Lynx/Axe’s Boom Chicka Wa Wa and the anti-perspirant’s role in the mating game. It might be the reassuring heritage of Hovis providing people with a thread through their ancestry and family lineage. Or it could be Cadbury’s transformation into an entertainment brand with its gorilla campaign and new dancing eye-brows ad that breaks tonight during Big Brother.
The coming year will no doubt hammer grocery brands. A select few will concentrate their fire power and stage a fightback. They need to give shoppers a strong reason to buy them rather than price because they will never beat supermarkets at that game.
The coming year will no doubt hammer grocery brands.
But marketers should remember why people are loyal to their brands in the first place. Brands need to have a clear idea of their role in shoppers’ lives to ensure their place on retailers’ shelves.