You can’t cut out your customers

To outward appearances, Unilever’s fabled ‘path to growth’ was stopped dead in its tracks last week, after less-than-lustrous quarterly figures persuaded the City to savage the company’s share price.

The reversal will certainly have resonance in the marketing community, because over the past four years Unilever has become the model of a successful brand-led company, and co-chairman Niall Fitzgerald a kind of iconic marketing figure (despite his background in accountancy).

Fitzgerald rightly shrugged off the investor reaction as hysterical, commenting wryly that if he had been in a honeymoon with the City all that time, it certainly hadn’t felt like it to him. He went on to compare, unfavourably, today’s climate with that which prevailed a century ago under Unilever’s founder, Lord Leverhulme, when managers would be given a clear brief and left to get on with it. In doing so, he gave voice to the frustrations routinely felt by those charged with implementing a strategy – particularly a marketing-led strategy – when they run up against the myopic timescales of the investment community.

It is unreasonable to pass judgment on ‘path to growth’ until it has run, or nearly run, its course in early 2005. The systematic brand cull, which necessarily accompanies Unilever’s development of 400 power brands, appears no more than half-complete on present reckoning.

Yet that does not mean that the widespread culling of well-known brands, which Unilever’s strategy has come to epitomise, is itself exempt from criticism. Indeed, there is reason to suppose the trend may have reached the limits of its usefulness.

The danger is that, in satisfying some stakeholders, the brand-cullers will grievously offend others.

Leaving aside for a moment the baying of voracious investors, there are several other compelling factors driving the concentration of brands. Among them is the need to create an effective counterweight to the power of UK retailers; correspondingly, brand owners must leverage limited media budgets to secure these retailers’ loyalty. Then again, the axing of secondary and tertiary brands gives multinationals grappling with globalisation the capital and managerial focus to build power brands.

But what of the poor old consumer? Are his or her views ever consulted? Brand owners will, of course, invoke reams of research endorsing their action. Even so, much of this smacks of ex post facto justification, rather than an accurate reflection of the view on the street. Take as one small example the spontaneous and irate reaction of viewers phoning in to a BBC radio programme last week, after learning of Cadbury’s imminent despatch of the Wispa name. That’s a long way from a consumer revolt – but brand owners should never be complacent.

Naturally enough, they will encourage us to reflect on the successes, rather than failures, of ‘path to growth’ style strategies – in Unilever’s case with considerable justification. All the same, it makes you wonder how much brand equity is being sacrificed in all this ‘slash and burn’. Especially when you review the recent case history of a product like Heinz Salad Cream.

Comments

    Leave a comment

    Close

    Discover even more as a subscriber

    This article is available for subscribers only.

    Sign up now for your access-all-areas pass.

    Subscribers get unlimited access to unrivalled coverage of the biggest issues in marketing and world-renowned columnists, alongside carefully curated reports and briefings from Econsultancy. Find out more.

    If you are an existing print subscriber find out how you can get access here.

    Subscribe now

    Got a question?

    Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

    If you are looking for our Jobs site, please click here

    Subscribers get unlimited access to unrivalled coverage of the biggest issues in marketing and world-renowned columnists, alongside carefully curated reports and briefings from Econsultancy. Find out more.

    If you are an existing print subscriber find out how you can get access here.

    Subscribe now