How Marketers of Branded Products Can Win
By Vinit Doshi, Principal

Store brands have been growing at the expense of branded products in many categories over the past few years. Fortunately, the picture is not all gloom and doom for marketers of branded products. If they are committed to understanding and leveraging the principles of consumer preferences and benefit-structured markets, they have good reason for optimism. A Market Map, which is a precise understanding of how consumers are behaving, for what reasons, and with what trade-offs, is a proven platform for evaluating and predicting the impact of different marketing strategies. As such, it is an essential foundation for managing a brand to a better outcome.

Unfortunately, many organizations do not fully appreciate or understand the power of a correct, precise, and behaviorally-based understanding of their market. Too often, a brand's competitive frame is based on category definitions, consumers' opinions, or a less-than-rigorous evaluation of consumer behavior. As a result, the hierarchy of benefits may be out of order or the spheres of influence through which consumers make choices and trade-offs may be misrepresented. Managing a brand with a flawed understanding of the market is bound to inhibit or even derail growth.

So, the first challenge for marketers is to understand how the market is organized, what their brands really compete with, and on what basis. After developing a precise, behavior-based understanding of the market, they are ready to understand how to guide their brands to more advantageous positions of sustainable and profitable growth, and how to prioritize the most viable opportunities among many seemingly reasonable options.

To level-set expectations, it should be noted that a Market Map does not tell a marketer what to do, nor does it say whether a hypothetical strategy is a good or bad idea. What a Market Map does is highlight opportunities and frame-competing options against the reality of market dynamics so that the opportunity size, positioning, product and spending requirements, and risks can be quantified and compared. In many cases, we can identify a range of options varying in scope, timing, risk, and opportunity size. This allows the marketer to determine the size of the prize, and what has to be true to win. Here are some examples of how companies can apply Market Map learning to grow their brands:

Enhancing and Sharpening Brand Positioning

The logical first place to look for growth is among your established brands in their current competitive frame of reference. In some cases, a brand may have significant upside potential in terms of consumer behavior that can be accessed. Well-differentiated brands often find that their strong loyalty versus their immediate competitive frame puts them in the enviable position of being able to bring in new buyers or increase usage simply by increasing media spending to communicate the brand's message to more consumers.

More often than not, however, brands have not fully optimized their potential from a positioning standpoint. Many brands may be competing in an undifferentiated way with other brands, representing the same benefits to the same consumers in more or less similar ways. Insights based on the Market Map can provide a breakthrough understanding of how to deliver the functional and emotional benefits of a market in a more compelling, more effective or different way than others are doing. Or it can show how to expand the benefit appeal to more consumers or across more occasions.

In recent years, some brands have leveraged consumer trends by emphasizing the simplicity and freshness of their ingredients to consumers most motivated by health and wellness. One particular brand of lunch and dinner products has done well by elevating its appeal from the basic product attributes that every brand stood for to a sharper connection with old world Italian sentiments. In other cases, positioning a brand to bridge multiple benefits has proven effective in improving relative value perceptions versus store brands.

Repositioning and Innovation

A Market Map represents "concentric spheres of consumer interaction," in which each sphere represents gradually broader sets of needs being met by a wider array of competitors. In this sense, a brand can look for growth by extending its positioning to stand for something bigger and broader. Taken to its logical conclusion, such brands can begin to own a benefit platform to a sufficiently distinct degree that they command greater loyalty and source volume from brands in other segments of a market. This is known as "partitioning the market."

A brand that has partitioned the market is characterized not only by a strong share, but more importantly by strong loyalty and a price premium it is able to command. Tide has differentiated itself as a high-quality, more effective laundry care product. Chanel owns a certain mystique in perfumes and luxury accessories. Orange juice stands for something different than other juices, based on a strong positioning of fresh tasting, good-for-you nutrition at breakfast and a history of innovation. Olive oil has earned a distinguished place among its peers on the basis of its taste and health credentials. Victoria's Secret and Starbucks have come to stand for distinct benefits to selected consumers which allow each to transcend the products themselves to own an experience.

White-Space Innovation

An integrated view of the market with consumer needs and usage behaviors can also help identify emerging opportunities to meet unaddressed or unknown needs. The bigger and further out the idea, the more likely it is to require significant product innovation. The process begins by examining the different needs that people experience across occasions and their satisfaction with the current solutions, all of which helps identify problem areas and gaps.

For example, the basic "hydration" benefit of beverages has been redefined and segmented to meet different nuances of the basic need, including portable hydration for everyone/everywhere/anytime (bottled water), hydration with replenishment (isotonics), hydration with nutritional benefits (vitamin and enhanced waters), etc. Nutritional supplements have succeeded by bridging together different benefits such as satiation, nutrition, and convenience to women looking for hunger-satisfying, nutritionally adequate, on-the-go meal replacements.

Exploiting the sufficiently large and viable white-spaces can sometimes provide more significant and sustainable growth opportunities than battling for share within crowded areas of the market. Effective innovation requires brands to extend their positioning platforms and equities to reach further out (or develop new brands), secure larger marketing budgets, and manage to a longer-term investment horizon. An effective portfolio plan that balances the risks and rewards by optimizing the shorter-term and longer-term opportunities of established brands and innovation simultaneously can enjoy significant competitive advantages and drive sustainable growth.

Having examined some examples of how to use the Market Map to one's advantage, it is equally important to note some principles of what not to do, or what to avoid as singular quick-fixes.

Fight Fire with Fire

The temptation to fight store brand growth by "right-pricing" the brand, or increasing price promotion, may yield short-term relief. However, unless the brand aspires to become just like another store brand, this is unlikely to drive profitable growth in the long-term. It may even focus the brand on fighting an unwinnable battle in the wrong part of the competitive frame. That said, pricing and promotion clearly play critical roles in the overall marketing mix. Our recommendation is to simulate and test pricing and promotion strategies as part of a comprehensive growth strategy in which these levers play a precise supporting role to the main storyline of a consumer benefit-centered strategy.

Undermine Product Effectiveness

Every promising strategy is ultimately predicated on the assumption that the product must deliver on consumer expectations. Reducing costs to improve margin can be risky. For some brands, years of small, seemingly innocuous cost reductions affecting ingredients, packaging, amount, and quality have compounded themselves into noticeable changes in overall product appeal, particularly as store brands have increasingly started to hold their own versus branded products. From our experience, it is clear that the growth of store brands in several categories is due to years of gradual cost reductions by the branded products having a detrimental effect on consumer satisfaction and allowing improved store brand products to grow share.

Without meaningful product differentiation versus store brands, justifying a price advantage becomes difficult for a branded product. For this reason, we recommend testing for relative product preference in the context of a brand's full competitive frame of reference. If your frozen sandwich brand's true competitive frame includes Subway and Quiznos, then product testing on your brand should include the sandwich chains' products. Following that, simulating the trade-offs between different levels of product positioning, quality, pricing, and margins can provide management a quantitative range of options to factually determine what size business is most viable from a total perspective of volume, revenue, and margin.

Drive ROI at the Expense of Growth

Optimizing the marketing mix is a powerful way to understand the drivers of the business, to quantify what works and what doesn't, and to evaluate the mix of tactics and campaigns. However, when used in an isolated fashion to reduce costs or improve ROI without effective growth strategies to guide the decisions, such "optimization" does nothing more than facilitate a more efficient deterioration of the brand (using proven tactics to do it!). Of course, continuous improvement in execution is important, but effective marketers seldom use the efficiencies only to cut costs, reduce risk, or make minor corrections to the mix. Effective marketers use it primarily to fund their most promising top-line growth strategies — and to do it smarter along the way.

In summary, we find that despite the availability of a myriad of products on store shelves, most consumers select from a small repertoire of products to satisfy their needs. This means that the standard of performance to thrive in competitive markets is very high. We also find that branded products can drive sustainable growth if they deliver against relevant needs with precise and compelling benefit propositions for specific consumer targets.

Marketers need a precise, fact-based understanding of the market to determine the linkage between consumer needs, benefits, and behaviors, known as a Market Map. Knowing the basis of competition is critical, not only against store brands, but against the entire relevant frame of reference. The encouraging fact is that the Market Map is a dynamic reflection of the ever-changing ways that consumers prioritize needs and organize behavior. With this knowledge, the marketer will understand the benefits a brand should reasonably strive to own through positioning and innovation. Markets can be changed by the actions or inactions of marketers — to the benefit of some brands and the detriment of others. Only the fittest will survive.