Nescafé, Persil, Red Bull, Haagen Dazs, Flora, Sunny Delight. Six big fast-moving consumer goods brands. Can you break them out into two groups of three?
My Group A consists of Nescafé, Persil and Flora, and my Group B is Red Bull, Haagen Dazs and Sunny D – and I draw two key points of contrast between them. Here’s the first. Group A consists of universal brands – I would be utterly unsurprised to find them in a student’s flat, a family house, a residential care home or a palace. Group B is made up of big brands, but they’re big in niche markets. I’d be very surprised to find Red Bull in my grandmother’s fridge, or Sunny D in the pantry at Buckingham Palace.
Here’s the second: Group A consists of brands which have been around for 25 years or more (much more in the case of Nescafé and Persil), while Group B consists of young brands (although not so young now in the case of Haagen Dazs).
I don’t think this is a coincidence. I think that with one big exception, fmcg marketers have long accepted the reality that it’s not possible to build universal brands from scratch any more.
It’s not easy to say quite why this is so.
Maybe it’s something quite serious and profound to do with the fragmentation of society: perhaps it’s the case that by definition, if a brand seems to be targeting X, then it’s rejected by Y and Z.
Alternatively, perhaps it’s a simpler truth to do with the level of impact and relevance a brand must make. If a new brand lacks a clear and precise sense of who it’s for and what role it will play in its target group’s lives, it will lack the strength to gatecrash the market’s current brand landscape.
Or again, maybe we’re dealing with a stark financial reality that’s all about the cost and fragmentation of the media landscape, where a breakthrough share of voice among a target market defined as ‘All Adults’ requires a budget beyond the reach of most marketing pockets. Tick all of the above, I suspect. Whatever the reasons, it seems you can no longer build universal brands from scratch.
The one exception I mentioned earlier is this: both in services and in fmcg, you can still build universal brands in new or immature markets.
As you’d expect, there are plenty of examples in the technology sector, from Microsoft to Orange to Amazon and Yahoo! – and quite a few, though not as many, in fmcg, from Muller to McCain to Dolmio.
It would seem that very large and diverse consumer audiences can respond quite homogeneously to new brands in new markets, buying into a brand because of what it is and what it does without worrying too much about what it stands for or says about them.
But even so, new markets don’t stay new for long, and once a small number of brands have occupied the ‘universal’ territory, other entrants have a simple choice: redefine the market so that they can take the ‘universal’ space under their own new definition (which is what Muller did in the yogurt market), or adopt a niche strategy (which is effectively what Apple was forced to do by Microsoft).
Much as I’m suspicious of transferring learning from fmcg to the service sector, this does seem to be one area that is equally relevant to both. Against this background, I can only pay tribute to the courage of so many marketers in service businesses – especially in financial services – still striving to transform large but largely undifferentiated businesses into universal brands in extremely mature and crowded markets.
Their persistence is all the more impressive when you consider the prettymuch- complete absence of any signs of encouragement.
Take the banks. You’d have to be a serious optimist to believe that they’ll be any more successful in building differentiated universal brands over the next, say, twenty years than they have been over the last twenty. The same is true of almost all insurance companies, investment houses and, I suspect, of many utilities companies, travel businesses, retailers...
Perhaps it’s time to consider an alternative. One based on the simple truth that there’s no reason why the target audience for brand development should be the same thing as the existing customer base. It’s perfectly possible to aim to build dominant brand perceptions in a nice big profitable niche without alarming or alienating the people who make up your customers today.
The textbook fmcg example of this is Lucozade, which, having achieved universal-brand status in the rather esoteric and declining market for carbonated drinks in the sickroom, dramatically reinvented itself as a highenergy sports drink and in the process created a whole new category.
It’s harder to find clear examples in services: TSB undertook bold initiatives in the youth market a few years ago, when it had the oldest customer base of any bank.
Unfortunately it was acquired by Lloyds before the results could be fully evaluated. Clerical Medical sought to differentiate itself by adopting the strapline ‘The Choice of the Professional’ but one can’t help feeling that this thought was never more than a superficial assertion. Why is Clerical Medical the choice of the professional? What is it about Clerical Medical that professionals want to choose? If there’s an answer, it’s time we were told.
Still, even if the case for a more focused and targeted approach to differentiation in service brand development is not conclusively proven, it still looks like a better option than another decade or two wasted on flogging the thoroughly dead horse of the universal brand approach.
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