Does a Megabrand = Megasuccess? (Nielsen) by Robert Witteman

June 2009

Does a Megabrand = Megasuccess?

Introduction A variety of forces (fragmentation, shrinking store footprints, commodity cost spikes, stretched consumers, etc.) are bringing increased attention on assortment from retailers and unique pressures on profits in the U.S. CPG industry. As marketers form business plans to address these issues, a recurring outcome is attempting to produce more efficiency from fewer brands. This gives rise to a heightened interest in the notion of “megabranding” from marketers as a way to economize costs and grow broader, stronger franchises that can be more resilient to these forces. This paper summarizes Nielsen’s collective marketplace learning on megabranding and offers advice in developing effective megabrand initiatives.

Is it a Megabrand? Brand

Yes/No/Maybe

Comments

Yes No Maybe

Crest

Presence across many oral care categories including toothpaste, whitening kits, and oral rinses.

Clorox

Broad use of the megabrand across laundry, home cleaning/disinfecting, and small durables

Pepperidge Farm

Variety of products in bakery, cookies, crackers and snacks

Dove

Extended across a variety of personal care categories, including body care and hair care

Budweiser

A huge, successful brand, but extensions only into different segments of beer

Cheerios

The dominate RTE cereal brand with a number of strong extensions, but within the category

Coca Cola

A global powerhouse contained in carbonated soft drinks

Olay

Plays successfully across many tiers in facial skin care, but debatable whether the equity stretches further

What do we mean by megabranding? Megabranding can mean different things under different contexts. For purposes of discussion, we are defining megabranding as the application of a brandmark across multiple consumption opportunities or need states that is not a category norm. Note we are including a qualifier around “category norm”. By this, we are alluding to the fact that, in some categories, all major brands offer product ranges that cross need states. For example, nearly all hair care brands have shampoos, conditioners, and styling aids. Nearly all bakery brands offer a range of breads, buns, and other rolls. Playing by the category’s norms, even if this means crossing over consumption opportunities, would not fit our working definition of megabranding.

Why pursue a megabrand strategy? We often see marketers consider megabrand strategies in light of the potential for marketing and operational efficiency across a number of fronts. •

•

Media – to the extent that a spot can support multiple complementary items under an umbrella strategy, the potential exists for greater ROI behind media support. Copy development – given the high cost of producing any form of ad copy, collapsing the number of creative executions needed presents a good opportunity for savings. Trade line promotion – folding multiple products into more impactful trade promotions likely results in improved efficiency and compliance. Consumer promotion – consumer promotions also can be bundled to improve efficiency and breakthrough. Leverage transaction size vs. penetration – Many of these efficiencies align with the consumer behavioral insight that it may be relatively easier to get a brand’s current consumers to buy more of the brand than to gain the same volume increase from a new buyer.

Net, there are many good reasons to think about this strategy. However,

along with the financial and operational efficiencies, it is just as important for the strategy to be informed by the consumer issues posed with megabranding.

How can megabranding result in sustainable competitive advantage? Potential efficiencies are important and valuable, but are rarely enough on their own to offset the risks associated with branding decisions. For a megabrand to be a megasuccess, the consumer rationale behind the strategy needs to be as compelling as the efficiencies. Volume growth is realized from a megabranding strategy when the consumer foundation is strong, supported by an efficient marketing program. Coming to terms with brand equity The first step to crafting a winning consumer-based megabrand strategy is to get the brand’s equity right. Being realistic about the brand’s meaning and where its strength resides is a critical stress test in developing the strategy. While this sounds simple in theory,

Many brands have access to equity/ tracking study data. These will often include a mix of perceptions, some that are very specific to the brand’s role and others that are important but more generic, like “high quality”, or “brand I trust.” These generic perceptions are usually not sufficient for exporting the equity to an adjacent or new category, yet we sometimes see brands attempting to extend without specific equity that can propel a successful adjacency. •

•

. . . we believe that misreading the brand’s meaning is the single biggest strategic error in megabrand strategies. When this mistake is made, brands fail to meaningfully connect with consumers as they migrate into new categories, sometimes with disastrous outcomes. For example, the Gatorade equity was likely misread in its failed attempt to extend into meal bars (2001). We believe that one of the key reasons is that Gatorade likely stands for “hydration” rather than “nutrition” or “performance” and likely did not form a solid link to the meal bar category in consumers’ minds.

For example, a brand like Chiquita has struggled to gain strong footing outside of its core category, as in most consumers’ minds the brand probably stands for “bananas” vs. something bigger like “freshness”. While Chiquita is a very well-known, trusted brand, it has struggled to support adjacencies. Dove, on the other hand, has a very identifiable benefit with its link to “moisturization.” This has allowed Dove to expand into categories like hair care on the basis of the unique moisturizing benefits associated with the brand.

The fact of the matter is that most brands lack distinctive, specific perceptions with consumers. R&D from the Ehrenberg-Bass Institute has shown that most brands within a category do not differentiate on the basis of specific attributes or associations. In their report on Brand Salience, the authors mentioned “Whether your brand is large or small, only a very small proportion of your customer base actually cares about your brand. If your brand were taken off the market few customers would

grieve. Most would just buy something else, some without even noticing.” Brands do differentiate on their propensity to be recognized and recalled in buying situations, but their specific features are far less known. For this reason, many brands do not have a strong opportunity for generating competitive advantage from megabranding. (Brand Salience and Why It Matters, Ehrenberg-Bass Institute Report, 16 March 2004.)

Net, the basic foundation of an impactful megabranding strategy starts with identifying a unique and ownable equity for the brand. These opportunities are not commonplace. Executing the strategy successfully beyond this involves choosing wisely where the brand’s unique equity can be relevant and leveraged for a competitive advantage. Efficiency plus unique consumer relevance = the big win for a megabrand Brands deliver consumer value from a simple hierarchy of benefits. The first level is from the ability to establish credibility to the proposition. Most often, brands that are well-known can enable this credibility with consumers, as long as the brand’s equity is relevant to the destination category. But in most megabranding strategies, the marketer has more aggressive objectives than just establishing basic credibility. Impactful megabranding strategies will leverage perceptions that are specific to the brand in a way that truly enhances the consumer value proposition. In this way, successful megabrands are built on a foundation of “unique relevance.” In the context of megabranding, the principle of unique relevance means identifying an ownable consumer

benefit that can be transferred to build competitive advantage in another category. Beyond just being well-known, the equity ideally brings a unique benefit to the destination category. For example, Special K snack bars (launched 2002) have been a major success for Kellogg – the meal bar category was well-populated prior to this entry, but Special K brought unique health and weight management benefits to snack bars and were a great fit with the lifestyle and habits of the brand’s target. • Unilever’s Bertolli Dinner for 2 (launched 2005) developed a unique position around authenticity and quality to develop a new segment within the frozen foods category. • Crest’s successful entry in 2001 into home whitening kits was brilliant in many ways, with the Crest equity and its clinical angle

•

playing a strong role. While other oral care brands also have strengths, we believe that few could have supported this proposition and developed this new category as effectively as Crest. On the other hand, Olay’s entry into cosmetics (Oil of Olay Color Collection, 1999) failed. While Olay is a very strong brand with multiple extensions in facial care, its equity brought nothing uniquely relevant to the competitive cosmetics category.

Destinations for megabrand equities often call for activating a secondary consumer driver. Capitalizing on megabrand opportunities often involves redefining the importance of the various “rules of the road” within a Category. In a practical sense, this often means that the marketer needs to grow the importance of a secondary consumer need to be more relevant to a consumer’s category

BASES ® Competitive Insights Analysis Performance by Brand +

Potential for Activation

Average

Driver #1 37%

Driver #2 19%

Market Leader

Driver #3 17% Brand #2

Driver #4 16%

Driver #5 6%

Brand #3

purchasing. We like to refer to this process as “activating” a secondary consumer driver. In forming a megabrand strategy, it is very useful to establish a foundational understanding of how consumers make choices in a category, using some variation of a market structure tool. The competing brands can then be mapped to their performance on these drivers to understand opportunities. For most categories, the largest brands are typically going to exhibit strengths on the category’s most relevant needs. Successful megabranding applications often are the result of leveraging a brand’s unique relevance to activate needs that were less influential because no brand was currently focused on that need. Critical examination of why the brand would be expected to drive competitive advantage in the destination category cannot be underestimated.

This is the single biggest bet in megabrand strategies. Impacting the relative importance of consumer drivers within a category is not simple. Brands that have done this successfully tend to have both a strong core strategy and also a sizeable marketing investment to energize this shift in consumer thinking and behavior.

Examples include: Clorox has both capitalized on a mega trend and further activated the sustainable/eco-friendly driver in home cleaning with Green Works (2008). Being the first mainstream brand to really leverage this position involved getting a substantial proportion of the market to think differently about these categories, but Green Works has effectively done that. In fact, in its first year, Green Works generated volume significantly higher than the established leader in the ecofriendly cleaner segment and helped grow the environmental cleaner category by around 40 percent. • P&G has had considerable success extending the Febreze brand into multiple new value-added extensions in the air care category. Febreze Air Effects, the initial venture of Febreze into the air care category in 2004, was able to drive sales growth in the mature instant action segment and now holds around a 25 percent share of the instant action category. The new Febreze air care products have succeeded in part by activating a contemporary/modern driver that was underserved by the established brands in the category. • While Crest successfully leverages its clinical equity to develop home whitening, this same driver seems to be far less relevant and represents a smaller opportunity in mouthwash for its 2005 Pro-Health launch that has only been able to capture around a 7 percent share. It is important to note that even megabrands can’t

stretch in an infinite number of directions

•

Equity transfers to establish credibility are useful for underdeveloped markets and segments. A less difficult branding decision is when a market is underdeveloped and can benefit from just the goodwill of a credible brand being offered in the space. In these cases, the expected return may be more modest, but this strategy can be enacted relatively quickly and with less risk. If the brand’s job is simply to address the credibility hurdle, then the primary positioning question is to be sure that the extension itself doesn’t pose risks for negative halo against the megabrand. This situation arises more commonly in cases of technical innovation or developing trends. • A good example is how a number of established brands successfully developed the daily shower cleaner category in the United States in the late 90s. While a fledgling brand (Clean Shower) was slowly building the category, once Tilex, Scrubbing Bubbles, and Lysol entered, the category was legitimized for consumers and volume responded. • Mr. Clean’s expansion outside dilutable cleaners provides another good example. Mr. Clean’s equity arguably centers on the more basic benefits of cleaning efficacy. It might be difficult for Mr. Clean to deliver any sort of competitive advantage into adjacent established categories with only cleaning ability working in its favor. However, P&G has chosen to tie

the Mr. Clean brand to very innovative products like Magic Eraser and Home Auto Wash Systems, where its cleaning equity and high recognizability add value. By leveraging the brand’s credibility behind these stretch innovations, the megabranding strategy has been a success for Mr. Clean.

Opportunities are not limited to brands that are wildly successful from a sales standpoint; the key is to have a strong equity. It is logical to look to the brands with the strongest sales rates as the best potential candidates for extension and megabranding. All other things being equal, we do believe that bigger is better in this context. But we do not believe that brand sales are necessarily the most critical factor. A strong and specific equity may be the more important issue for creating a megabrand platform. So, looking first to the specific equity and how that is relevant and transferable to a different category is the key. Many big brands do not have the flexibility for megabranding, but some smaller brands might. Mr. Clean provides a good example of this principle. Mr. Clean was a relatively small volume brand in the United States through 2002, mainly selling dilutable cleaners with a share of 10 percent. But, the brand had very broad awareness and recognition, a

strong cleaning equity, and an iconic visual equity. When P&G launched Magic Eraser in 2003, it effectively leveraged the base equity to both establish credibility for this novel product and generate good efficacy expectations with consumers. The product was a strong sales performer, easily outselling the base Mr. Clean cleaners in its first year. Since then, the Mr. Clean equity has also been successfully extended into DIY car care kits along with a licensed retail auto wash. Today, the sales for the Mr. Clean equity are nearly $120MM* almost double where sales stood prior to these adjacent category extensions. All this from a base brand with only 10 percent annual penetration. The lesson learned is that brands can be reinvented with a megabrand approach, but a strong technological or marketing disruption may be a necessary catalyst. *U.S. food, drug, and mass outlets (including Wal-Mart)

The best megabrand candidates transcend functional equities. As we survey the market, we are struck by the number of successful megabrands that have very unique equities that stretch across fairly broad space.

For example, Nike = high caliber athletic performance • Gerber = the American baby • Special K = a weight management lifestyle • Healthy Choice = balancing good for you and good taste benefits across a wide range of foods •

These brands have strong transferability in part because they have equities that are specific but also applicable to a wide range of applications. This also highlights how challenging megabranding is for most brands. Only a select group of well-tended brands have this sort of flexibility and meaning to be a viable megabranding candidate.

What makes for a winning megabrand execution? Money changes everything Since consumers don’t put strategies in their baskets, megabranding programs are only as effective as their accompanying marketing support. We don’t believe there is a simple onesize-fits-all approach when it comes to support, but one finding is clear: it is difficult to find examples of successful megabranding that don’t involve meaningful marketing investments. Most marketers do not employ megabranding as just an efficiency play. Rather, they view it as an opportunity to play offense and grow volume and share. Because this strategy is so often played with a heavy spending hand, the strategic implications can get blurred. Remember, heavy spending can compensate for weaker fundamentals. If you can afford to overinvest, then

topline objectives can be met even with a plan that is flawed. On the other hand, recognize when you are not planning to invest heavily and place a greater imperative on getting the strategy right. •

An example of this may be Gillette’s aggressive push in male cleansing and grooming. This is not meant to be a comment on the Gillette equity per se, but when a brand is investing so heavily to grow a category, the equity’s unique contribution is less clear. Around $37MM in measured media was spent on the Gillette hair care extensions in the past year. The relevance of the Gillette equity outside of shave products may be “forming on the fly” as it continues to benefit from aggressive investment spending.

Transferring an equity to a new one is challenging and must be treated as a new brand from a marketing P.O.V. Most often, megabranding is executed as an extension. Under this model, marketers instinctively think and act as if they are launching a new item. This usually involves the new product paradigm of investing in awareness and trial through media and promotion, and a close eye on ongoing consumption and repeat purchasing. Occasionally, a megabrand strategy is implemented as a swapout of an existing equity for a megabrand. This approach is not used frequently, but a timely example exists in dish care where Reckitt-Benckiser is attempting to migrate the Jet-Dry brand for the Finish brand on its rinse aids, and also

convert its Electrasol detergent to the Finish franchise. As the Finish branding is being implemented, there is a visible co-branding at least for an introductory period and advertising for the Finish brand has ramped up to around $38MM with a substantial portion of that spending being focused on the equity transfers. We believe this co-branded approach is wise, as it helps provide clarity for consumers of the Jet Dry and Electrasol brands. If approaching this transition more aggressively (e.g. forgoing the co-branded presentation), the marketing investment would need to be much higher to compensate for higher consumer confusion and attrition. At any rate, given the longer purchase cycle, this transition will take time for the consumer to turn over to the new branding.

more specific purposes. For closer-in adjacencies like the automatic dish detergent and rinse aid, a combined copy strategy may be effective. But stretching megabrands further out to different usage contexts will likely necessitate more dedicated copy in order to achieve growth. Getting carried away with efficiency can jeopardize individual segments, and family advertising has only a narrow purpose. Successful megabrands also tend to have friendly neighbors. A move into a new category often puts even the biggest brands at a competitive disadvantage. The current players in the category have established relationships with retailers and can leverage these relationships for preferential shelf space, speedy distribution for new items, and quality promotional support. These established players also have years of knowledge around how to successfully compete in the category. One observation we have made is that many of the megabrand

Copy halo is good, but it remains necessary to create consumer demand via a strong marketing push. If relying on megabranding to drive growth, an over-reliance on family media or promotion is likely to fall Average Year I Media Spending short of goals. $25 Most successful megabrands do $20 not place great $15 weight on family messaging. In $10 most cases, consumers $5 already know the $0 base brand – they’ll need to Successful Adjacent Failed Adjacent be educated and Brand Extensions Brand Extensions convinced on the Sourced from Nielsen Media data to help examine the success drivers for launching brands into adjacent categories. In this analysis, successful extensions megabrand’s are defined as those that maintained stable distribution for two more years relevance for after launch.

successes are moving into close categories where the marketer has experience and other “sister” brands. This facilitates successful trade execution and builds on established trade/buyer relationships. For example, Crest is probably in a better place to extend to the mouth rinse category given the marketing knowledge and retailer relationships P&G has built through marketing Scope. Similarly, Kellogg’s experience with Nutri-Grain likely facilitated a less complicated entry for Special K into the cereal bar category. In addition to these marketing and retail advantages, manufacturing synergies may also be enjoyed by staying in categories familiar to the manufacturer. Even when the strategy is right, competitive reaction can be overwhelming. Like all new product activity, success in megabranding relies on a delicate balance of relevant insights, sound strategies, and strong execution. Even when these elements are in place, the severity of competitive reaction can be difficult to anticipate. Higher quality initiatives are likely to provoke even more powerful competitive response.

franchise, working to negate the claims and promoting with the Trade and consumers. By the Clorox' second year, dollar volume had fallen 40 percent and continued to decline at a similar rate into its third year.* *Sales in FDM less Wal-Mart.

Conclusions Megabranding can be a successful strategy for generating marketing and operational efficiencies as well as overall brand growth; however, to realize these advantages, the strategy must be navigated carefully. A successful strategy requires that the manufacturer clearly understands what the brand stands for in consumers’ minds and makes the right choices on where the brand’s unique equity can be relevant to the category and leveraged for a competitive advantage. Successful megabranding also requires a commitment to support the brand as it works to extend itself into new categories and usage states. When a manufacturer can identify the right equity, leverage it in a relevant category in a relevant way, and vigorously support the initiative as it extends into new categories, the ingredients may be in place to turn a megabranding strategy into a megasuccess.

About the Authors Rob Mooth Rob has worked in packaged goods marketing for 20 years, with a variety of roles in brand management, market research, and product development. He has been with Nielsen for 11 years, mainly in its BASES Client Consulting Group. He has helped bring dozens of new products to market successfully and has authored a range of papers and articles on topics related to innovation. He is currently the Vice President, Cincinnati Region Manager. He holds bachelor’s degrees in Economics and Chemistry from Indiana University. Mike Asche Mike has been with Nielsen for 13 years and has consulted on successful innovations across a wide range of CPG manufacturers and categories. He is a Vice President in BASES Client Consulting Group. Mike holds a bachelors degree in Marketing from the University of Kentucky.

Clorox had what appeared to be a strong entry in the disinfecting spray category in 1999. The equity was highly relevant, the space had only one major branded player, support was compelling with a unique claim, and there would certainly be efficiencies within the megabrand’s marketing approach. However, given the clear threat to the Lysol business, Reckitt-Benckiser responded extremely aggressively to defend the