This is the 3rd in a series of periodic guest posts. Mike Ferry is a senior general management and marketing executive, with extensive experience at Procter & Gamble, Segway, Abbott Labs, and Campbell Soup.
If you have ever had the opportunity to work on a market-leading brand, you know from experience it is both a privilege and a challenge. On the positive side, market leaders typically have strong brand equity, excellent profitability, and score well on key measures such as awareness, trial, and loyalty.
On the challenging side, companies expect strong, consistent profitable growth from their market leading brands, and in many categories this can be exceptionally difficult to deliver. Trying to continue growing share when you are already the market leader often results in heavy price competition which has the unintended result of driving profit out of the category for everyone.
In many ways, it can be even harder to stay on top, than it is to get there, as the low-hanging fruit has already been picked. With that in mind, here are five suggestions to help market leaders continue driving profitable growth:
1. Focus On Growing The Category, Not Stealing Share
Years ago when I was working on the Bounty paper towel business, the brand was market leader with a share nearly triple its closest competitor. Rather than seeking to simply grow share, our team recognized that the paper towel category had expandable consumption, and as market leader it was our responsibility to drive category growth. Read on for more detail on how this worked for Bounty.
2. Get In Bed With Your Heavy Users
Really understanding what makes your heavy users tick has multiple advantages. First, it helps ensure you don’t do anything which will alienate them, which can have catastrophic consequences. Coca Cola would have avoided the whole New Coke fiasco had they shared their plans to change the formula of Coke with their heavy users.
In addition, studying your heavy users allows you to understand what differentiates them from your typical user, and can lead to strategies to get more users to adopt the heavy user behavior. In the Bounty example, the brand’s heavy users tended to use paper towels for tougher cleaning tasks than typical users, and tended to keep larger quantities of Bounty on hand.
3. Don’t Define Your Competitive Set Too Narrowly
Step back and see how the consumer views your category, and what alternative products they consider when selecting your product. In the Bounty example, while heavy users were using paper towels for tough cleaning tasks like washing dishes, cleaning large spills, or scrubbing carpets, typical users were using sponges and rags for these tasks. By understanding that Bounty was competing with sponges and rags, we were able to show the benefits of using a disposable paper towel versus a durable product like a sponge, which can be a breeding-ground for germs.
- A second example here would be Campbell Red & White condensed soup. If you define the category as condensed soup, Campbell has an 85% share, with little room to take additional share. Defining the category as all shelf stable soups and broths helps some, but doesn’t reflect how the consumer really views the category. By studying consumer behavior, the Campbell team was able to understand that the consumer is considering condensed soup along with other quick “minimeals” like a sandwich, frozen microwave entrees, etc. This insight led to sharper consumer communication on when and why to choose Campbell condensed rather than some of the other alternative foods.
4. Stretch Your Brand Equity By Launching Innovative Line Extensions…Consistent With Your Current Brand Equity
Continuing with the Bounty example, we launched Bounty Quilted Napkins, bringing Bounty’s strong and absorbent equity to the napkin category. A second positive example would be Crest, which figured out they could extend their brand equity beyond simply cavity protection to total mouth care. This led to a stream of new products including tooth brushes, oral rinses, and of course, Crest White Strips.
On the other end of the spectrum, Jif Peanut Butter, whose equity has consistently focused on “more peanutty taste”, attempted to launch a line of flavored spreads called Jif Smooth Sensations which came in flavors like Chocolate Silk, Apple Cinnamon, and Berry Blend. Jif’s brand equity could not be logically extended to non-peanut flavors, and the line failed.
5. Optimize Your Product Lineup To Maximize Productivity From Every SKU
Finally, in the current world where retailers are closely watching SKU count, it is critically important to take a hard look at your product lineup to make sure that every SKU plays a meaningful role, and the whole maximizes productivity. On Bounty, for example, we found that productivity went up when we concentrated our lineup on larger sizes. Driving consumers to large count packs resulted in consumers’ increasing their in home consumption, and resulted in higher loyalty as measured by share of requirements.
A second example here would be Ensure nutritional shakes, which typically retail for $7.99 or higher per six pack. Consumers were often hesitant to spend eight bucks to try a product they might not like. By launching single bottle trial size, that barrier was overcome and overall brand volume went up.
Certainly there are many more ways to drive leading brands to profitable growth than those we briefly reviewed here, but I have been fortunate enough to have a positive personal experience with each of these five. What are your thoughts on other ways for leading brands to drive profitable growth?
I hope you’ve enjoyed this post, welcome your comments, and also would like to invite you to stop by my blog, Leading Good Brands to Greatness.
Mike Ferry currently serves as an independent consultant and advisor. His experience includes Vice President and General Manager for Abbott Nutrition, Vice President Marketing for Campbell Soup, Vice President Marketing for Segway, and various brand management roles for Procter & Gamble. Mike holds an MBA from the Kellogg Graduate School of Management at Northwestern University, and a BS in finance from Miami University.