Extensions that stretch credibility

If necessity really is the mother of invention, packaged goods manufacturers will never have been so busy.

Declining margins in mature markets ensure that, once various cost-cutting “efficiencies” have been put in place, the only way to make extra money for shareholders is by stealing market share from competitors. Price, of course, is one weapon – but a rather two-edged and unpredictable one with a nasty habit of undercutting brand positioning.

The only sure way forward is to tempt the consumer with an array of innovations. But it’s not easy for manufacturers in this sector – which, by definition, creates utility products of low excitement value to the buyer – to get the balance right. Genuine innovation is an expensive, time-consuming and risky business. Everyone, of course, has heard of the Persil Power disaster. But the pitfalls were more subtly demonstrated by Durk Jager’s regime at Procter & Gamble. Jager certainly understood P&G’s key strategic problem: an inability to innovate fast enough in changing market circumstances. But his solution – to accelerate the passage of new products to market – caused too many launch miscarriages and too much corporate turbulence. Eventually he was fired.

Most companies, most of the time, settle for fairly insipid brand extensions. Ideally, they generate sufficient excitement at the point of sale (and in the media) to gain a temporary advantage over rival products, while adding a bit of margin at a fraction of the cost (in every sense) of full-blown innovation. What they don’t do is build any lasting loyalty with consumers. Furthermore, they are easy to imitate and – if a company indulges in mindless brand extension too frequently – may persuade the consumer that the so-called innovation amounts to little more than cynical repackaging and gimmickry.

Into which of these two categories does the latest batch of new products from the detergent manufacturers fall? In short order, we’ve had tablets, we’ve had capsules and now we’re about to get… tea bags. Or, more precisely, soap powder that’s delivered in a soluble sachet resembling a tea bag. Presumably, the new product is supposed to deliver a measured dose even more efficiently and cleanly than its predecessors. But it is difficult to avoid the impression that this is an ‘innovation’ too far. True, it will cause a bit of a stir and probably catch the consumer’s eye. It will also create a degree of aggravation, both among retailers – who see their shelves being cluttered by something of only dubious product benefit which they will be forced to imitate – and among confused consumers, who may well not understand the product difference anyway.

Much the same can be said about the worlds of nappies and toilet roll – where we are promised a raft of new developments shortly. They will capture consumers’ imagination for five minutes, if that. Rarely does npd deliver real innovation – like the brewers’ discovery of the widget in the early Nineties. Still more rarely does a company create a lasting association with an innovation – such as Tetley with the round tea bag. It’s the ones we remember that matter – the rest are brand strategy by numbers.


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