Datamonitor analyses key to brand success

UK consumer brands will succeed in the recovering economic markets if lessons are learnt from the last two years, according to new research from independent business analyst Datamonitor.

The study entitled Successes and Failures in Consumer Goods Innovation has revealed the difficulties brands face in capturing the attention of consumers, with over a quarter of UK consumers saying they simply don’t even notice new products on the shelves. Datamonitor figures show manufacturers bombarded the FMCG market with over 1600 product innovations launched globally between 2007 and 2009, creating an environment where it is easy for new products to become lost.

In this competitive market, Datamonitor has examined over 100 key brands globally over the last two years to identify key themes which have helped FMCG companies to achieve success. Within these themes the study has identified complex issues behind the performance of the brands.

Ethical branding

One of the key drivers of product innovation success has been consumer demand for ‘value driven’ branding. This has contributed to the success of ethical brands such as organic fruit and vegetable delivery company Abel & Cole in the UK and environmentally friendly US based Clorox Green Works.

Author of the study Vicky McCrorie said: “The US household care market was stagnating and new products were struggling to get a foothold. However, by tapping into the consumer interest in ethical and ‘green’ products, Clorox managed to gain new custom. Green Works is now the leading green household care brand in the US, accounting for over 40% of the market share.”

Engaging with Customers

The report identified Scottish brand BrewDog as one of the big successes of the last decade. It launched in 2007 and is now the largest independently owned brewery in Scotland. Datamonitor believes that key to BrewDog’s appeal is its employment of ‘hypermarketing’ which involves addressing the specific requirements of a particular consumer type therefore helping them to form an emotional engagement with consumers.

Vicky McCrorie continued: “BrewDog achieved success by matching its product with the target consumer and ensured that everything down to the name reflected the individualistic young adult consumers’ desire to opt for brands that embody self expressive values.”

Delivery of strong sensory appeal can also be critical to a brand's success. Coca-Cola’s launch of its Mother energy drink into the Australian market faced a significant hurdle in engaging with the consumer. When its initial formula of the brand failed to appeal to consumers, the company went back to the drawing board and launched a reformulated version targeted to deliver what the consumer wanted. This strategy paid off as it is now one of the biggest energy drinks on the market.

Rituals rather than economic savings

A number of success stories have focused on offering something unique and experiential for a given consumption occasion by ritualizing the preparation and consumption of products. Old El Paso in the US tapped into an increase in families eating at home due to the economic down turn by creating the ritual of ‘Taco night’. As the marketing associated ‘taco night’ with re-connecting rather than saving, its relevance will endure beyond the recession. As a result of this marketing, sales were boosted by 9% in the last quarter of 2009.

However, creating a long-term winning brand through this ritualized focus can be hard, as the Magners brand shows. Vicky McCrorie commented: “Creating or exploiting rituals to ensure a brand doesn’t get lost has proved to be very successful. However, Magners in the UK is an example of how a ritual can easily be mimicked by other brands. After huge initial success, sales began to fall as brands such as Strongbow and Bulmers piggybacked on Magners ‘over the ice’ message.”

Failures

Datamonitor’s research has revealed that the performance of a new brand does not rely solely on innovation or a marketing strategy; instead success depends on a number of factors, including competitors and the market conditions. Therefore analysing why products fail is key to understanding how to give a new brand the best chance of success.

In the UK, the Red Bull brand attempted to extend into the cola domain with little success. Consumers have not seen a fit between the Red Bull brand and its associated energy credentials in the cola space and sales have remained weak.

In France, Essensis was launched by Danone in 2007 as a beauty food that could improve the appearance of skin. The product failed to connect with consumers and was withdrawn just two years later, highlighting how this market has yet to reach a critical mass due to a lack of ‘innovation readiness’ among consumers.

Even when a brand manages to break through, failing to maintain innovation can lead to a loss of market share. The O-Box in China is a key example of this. It was the one of the first juice drinks launched in China and effectively created the low concentrate juice sector. However, a number of competitors quickly jumped on the band wagon and O-Box has not been able to defend its position.

Vicky McCrorie concluded: “The success of new product launches is not formulaic. Brands need to combine innovation along with an understanding of how to truly capture consumers' imagination and deliver what they want.”


Report by Vicky McCrorie, Consumer Analyst at Datamonitor

1 February 2010 - Felicity Murray