Package Goods as a Battlefield

Are Product Margins Merely Margins of Error?

Packaged goods companies, like P&G and Unilever, continue to fight for every drop of margin they can squeeze out of a crowded category. Traditionally, the brand was powered forward through product innovation, research and development. New advertising campaigns rolled out when product improvements warranted them. Pampers, LUVS, Tide, ALL, and Mr. Clean are all a case in point. Preference and margins cannot be found in product enhancements and efficacy — these two improvements are simply the cost of doing business. In today’s crowded market space your preference and margins stem directly from your brand. In reality most brand marketers and brand managers are actually product managers and are hard pressed to describe their own brand in any terms other than banal category benefits.

This pit-fall is not to be unexpected. Universities and colleges fail to understand the intricacies of a brand and thus do not prepare future brand executives accordingly. The famous brand management pathway at Proctor and Gamble merely indoctrinates the future "brand managers" as traditional product managers. Furthermore, it is nearly impossible to mend a brand from the inside out due to the Herculean task of dispassionate brand evaluation and analysis. It is important to note that your brand is not the identity of your product. For example, Pampers is not the brand, it is the name by which consumers know the brand. Pampers is not about dryness and efficacy as it once was some years ago in a time when the brand was new and the category was immature and uncrowded. Those were the days when brand marketers looked for the unique selling proposition (USP) that identified a differentiating product benefit. “How the product is different and better” became the marketing mantra and R&D became the means to an improvement.

The End Result

As a result, the “brand” became product development driven, and the brand strategy fell out of those attributes. Inevitably, the market changes over time. The “brand” is now the supermarket or retailer where the product is sold. The consumer sensibly believes that everything within the retail category will deliver product performance. When it comes to laundry detergent —Tide, ALL, Ariel, DAZ, and Arm & Hammer will all clean clothes well. There is no mystification among consumers that all brands of disposable diapers keep their baby dry and comfortable. Most diapers fit well, stay in place and eventually end up in landfills. Therefore, when the diaper shopper goes to her local retailer, she believes that there is little difference between Pampers, Huggies, Luvs or “store brand.” Sometimes she will choose based on the experience of “right fit” because different brands of diapers will fit her child better as her loved one grows and changes. Frequently she will decide based on price or an emotional connection that she neither examines nor understands.

Marketers think she will be influenced by the latest cartoon character or color scheme because they are still caught in the times of the stale USP paradigm. If it is so difficult to justify the margins based on product efficacy, what is left? The essence of brand, the value the consumer invests in the brand itself, remains potent regardless of category or product. Brand preference is not an investment in product benefits but rather an investment in self-description and often hidden precepts. What consumers buy today, beyond commodity category benefits, is a reflection of themselves and their lives. When they choose a brand — a REAL brand — what they are in fact reinforcing is their identity, who they believe they are at that very moment in time.

This extension of identity is called a brandface and your consumer shows many. Due to the ample excavation required to bring the customer’s perceptive personality to the surface, brand development is more akin to anthropology than marketing. If the customer sees their reflection within a brand and affirms, “yes, I want to be that,” you will keep them for life. Any brand that understands that clearly will win easily in the crowded market place of similar products, similar claims and similar price points. Recognizing and evoking the most acute and important brandface with regard to your brand is a difficult process, but in that germinal seed of self-description you will find preference, margins and loyalty.

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